Dáil debates

Tuesday, 18 December 2007

Competition (Amendment) Bill 2007: Second Stage

 

7:00 pm

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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I move: "That the Bill be now read a Second Time."

I am glad that we are discussing, this evening and tomorrow, the Labour Party's Private Members' Bill to amend the Competition Acts. This Bill is about the vindication of a fundamental principle, indeed a right, namely, the right to collective representation. This Bill aims to ensure that legislation cannot be used to undermine the right to collective representation of atypical workers such as actors, musicians, freelance journalists and others, or to block representative organisations negotiating with the Government or national bodies on behalf of their members, as is currently the case.

This means in practical terms that we are seeking to ensure the right to collective bargaining of those who can be, and who often have been, some of the most exposed workers in the State. These include, although they are in no way confined to, members of Irish Equity, members of the Musicians' Union of Ireland, the NUJ freelance section and others who have been precluded from negotiating with the people to whom they sell their services as employees by way of collective bargaining. These are often in instances of severe asymmetry, where an individual seeks to negotiate with a large and dominant organisation. Indeed, the issue first arose in the context of the difficulties undergone by members of Equity, the Irish actors' union. I must declare an interest here, as my wife is a member of Actors Equity and I know many of the people who are members of that section of SIPTU. I raised this matter on the Adjournment of the Dáil at the time, which is now over two years ago. At that time, the issue centred on the fact that Irish Equity had been forced to sign an undertaking stating that the union would not negotiate fees for actors working on commercials for private companies. The rationale given by the Competition Authority, and parroted by the Government at the time, was a fear of price-fixing by actors involved in services such as voice-overs of advertisements on television or the radio.

When I raised this issue on the Adjournment on Tuesday, 15 November 2005, I posed a fundamental question. Can an EU directive on competition that has been translated into Irish law be used in such a fashion as to undermine the rights of workers to collective representation? These are rights that have been hard-won and are enshrined in trade union law and in the conventions of the ILO, of which Ireland is a signatory. The Minister at the time, taking a particularly incoherent approach to the issue, took the view that actors be viewed as independent contractors rather than PAYE workers. As the very nature of an actor's employment, as well as that of other groups affected by this unsympathetic, even hostile, interpretation of legislation, means that he or she often lacks continuity of employment, such a designation could never be applied in the first instance. If people are in any doubt, they should look at the Arts Council survey on actors' incomes. The Minister replying to me on that occasion stated inter alia:

On the question of whether actors are 'undertakings' within the meaning of the Competition Act, I understand that, 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 — they may work for several at the same time. Such actors generally do not receive the benefits one usually associates with a contract of employment. For example, they generally do not receive holiday pay, health insurance, maternity leave, etc.

He said it as if this were a good thing. The upshot has been that these actors have suffered serious wage cuts and they have been denied the right to have unions make representations on their behalf or negotiate collective agreements. Freelance journalists, musicians and others are in a similar position.

The decision by the Competition Authority to use section 4 of the Competition Act 2002 against actors has immense implications. The fact that the trade union SIPTU was forced on the steps of the court to sign a declaration that it would not represent such actors was a low point in the modern history of Irish industrial relations. While the Competition Authority had begun with actors, all atypical workers could be affected. At a time when there is a drive for the casualisation of work and when we are already experiencing the abuse of workers provided on an agency basis, we need to vindicate the right to collective representation now more than ever.

The interpretation of section 4 of its founding legislation — the Competition Act 2002 — taken by the Competition Authority cannot be allowed to stand. I believe its implementation is inherently wrong, immoral and illegal since it is in violation of treaties which Ireland has signed and ratified. We have accepted an international obligation on the fundamental freedoms and rights of workers, and the right to be represented collectively. In this context, it is surely scandalous to have arrived in a position such as this, where an ideological attack on some of the weakest workers in Irish society, to whom we have never given proper recognition through social welfare, pensions or income, has been allowed to come about. Each individual worker, be they actor, musician, writer, photographer or anything else, is defined as a business and not a worker. This is simply a violation of the International Labour Organisation convention. Neither is it in line with a recent, and very important, decision of the European Court of Justice, which was asked to adjudicate on the competing rights of transnational commerce and the right of workers to collective representation. I will return to this case.

On Wednesday, 1 March 2006, I raised with the Taoiseach the implications of what was unfolding in terms of the undermining of the rights to collective representation. He affected a concern on more than one occasion, particularly as the talks with the social partners approached. On 28 March 2006, he replied to me, partly acknowledging the concerns of the social partners on this issue. In the course of his letter to me, he stated:

The investigation by the Competition Authority was in relation to a possible breach of Section 4 of the Competition Act 2002, which applies to 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. The legal issues involved are therefore quite complex, in terms of striking an appropriate balance between the differing considerations of competition law, including EU provisions on the one hand, and the relationship between these considerations and industrial relations law and practice, including the role of collective agreements, on the other. As you know, ICTU has raised specific concerns about the approach of the Competition Authority in this matter. I appreciate fully these concerns, and I believe that a review of the range of legal and other issues involved would be worthwhile. While the difficulties that these issues present should not be underestimated, I remain optimistic that an appropriate and balanced solution can be developed in the context of a dialogue between the relevant union interests and the Authority against the background of the negotiations towards a new social partnership agreement that are currently underway.

That was in March 2006. However, nothing happened.

The matter of collective bargaining has been to the fore over recent times. There are two principal issues which have served to highlight the theme. In an international context, the Viking Line case, case C-438/05, has attracted attention across the European Union. In this recent decision of the European Court of Justice, delivered on 11 December 2007, the court declared the right to collective representation to be a fundamental right. This formed part of the judgment of the Laval case, which was just announced today. This case concerned a Finnish ferry company, Viking Line, which sought to re-flag its ferry in Estonia using low-wage Estonian crews. The Finnish seafarers' unions protested. They were taken to court by Viking Line on the grounds that they were interfering with the company's right to provide services under EU law, which is a central tenet of that law.

In its judgment, the European Court of Justice in Luxembourg held that the right to take collective action, including to strike, is a fundamental right and forms an essential pillar of the general principles of EU law and is not subverted by the right of businesses to operate anywhere in the EU. In the ruling, the European Court of Justice found that Viking Line's right to provide services did not overrule the right of workers to take collective action to protect their legitimate interests. This is particularly important on the eve of the proclamation of the European Charter of Fundamental Rights, which includes the right to collective action and will be made legally binding in the Lisbon treaty, should it be accepted.

It is an important ruling with implications for workers all across Europe, including Ireland, as it confirms that the right to take collective action to protect workers cannot be subsumed by the right of businesses to operate in other countries. It is also of relevance to the issue at hand on a domestic basis, since it demonstrates moral and legal leadership with regard to the right to strike. While the European Court of Justice found that strike action constituted a restriction of the right of freedom of establishment, such action was justified because it was done in pursuit of a legitimate aim, namely, protecting the jobs and conditions of employment of union members.

The Competition Authority's interpretation of section 4 of the Competition Act 2002 and its related court action in the case of Actors Equity was rolled out to challenge the right to collective representation in general. On a domestic level, we have seen the difficulties encountered by members of the Irish Pharmaceutical Union in seeking to negotiate a collective agreement on behalf of its members with the HSE. The current dispute between the HSE and the pharmacists over plans to cut the margins for dispensed drugs has been greatly complicated by the refusal of the HSE to negotiate collectively with the Irish Pharmaceutical Union. The HSE argued that a High Court decision taken by the Competition Authority and brought to the steps of the court in the case of Actors Equity prevents it from negotiating with the Irish Pharmaceutical Union, stating that pharmacists are undertakings. Such an interpretation challenges not only the right to use its negotiating power by the Irish Pharmaceutical Union, but the right of all those with a negotiating mandate, such as dentists in the health service negotiating with the Department of Health and Children or the HSE, or vets negotiating with the Department of Agriculture, Fisheries and Food.

This Bill that I introduce on behalf of the Labour Party would vindicate the right to collective negotiation in all of these circumstances. It would eliminate one of the major obstacles standing in the way of a resolution of the current crisis in the pharmacy sector. In a letter to all Deputies and Senators, Mr. Michael Guckian, President of the Pharmaceutical Society of Ireland, stated:

the Union is prepared to go to the table without any preconditions, or predetermined outcomes and we would hope that the HSE would do likewise. The Union has proposed that talks on a new pharmacy contract, under an Independent Chairperson, should commence immediately. The purpose of these talks would be to reach agreement on all aspects of the contract, including an appropriate pricing structure for the delivery of pharmacy services. This had previously been agreed with the HSE at a meeting in November. When agreement is reached on an appropriate pricing structure, the matter could then be referred to the new proposed arbitration system, which the Minister for Health and Children alluded to in the Dáil on 21 November 2007. It is hoped that such a Body or System will provide an independent and fair assessment of all of the issues involved and could then make recommendations to the HSE on pharmacists' remuneration. However there is no indication, as of now, the HSE are prepared to proceed on this basis.

That is a fair letter and deserves to be treated fairly, without people retreating regularly for legal advice to encounter the obstacle of the Competition Authority. This offer from the Irish Pharmaceutical Union should be taken up and a resolution could be achieved. The passing of this legislation would ensure that it would not be necessary to interrupt the talks at the point of nearing agreement by legal interventions as to whether pharmacists have the right to be collectively represented.

The basic question is whether the person engaged to perform services is performing them as a person in business on his own account. For Competition Act purposes, the test is whether an individual is what the Act refers to as an undertaking, defined as a person engaged for gain in the production, supply or distribution of goods or the provision of a service. If he or she is engaged for gain, as opposed to being paid a wage, then the Competition Act applies, and as far as the Competition Authority is concerned, and collective agreements are prohibited.

This interpretation is legally frail as well as being inoperable and recipe for chaos in industrial relations. The Competition Authority's reliance on the Revenue Commissioner's definition of worker as that of a PAYE employee is arbitrary and unacceptable. The key definition in the Competition Act is that of undertaking, which is how atypical workers have been classified. Following this rationale, such workers have effectively been designated as mini-businesses, each with their own contract, with apparently no contact with or connection to fellow workers. This bears little or no relation to the reality of the situation.

One has only to consider what the implications of such a view would be in a labour market where not only are there atypical workers, but also workers who have been made redundant and who are asked to sell back their services on contract. They do so, of course, at the risk of sacrificing all of the protections and benefits that have been won by trade unions over generations.

This Bill has two principal aims. It would enable trade unions to organise and negotiate collectively on behalf of individuals who enter into work under contracts "personally to do or provide any work or services", the emphasis being on the word "personally". It follows that such individuals should not be classed as undertakings for the purposes of competition law. However, self-employed individuals would continue to be prohibited from price fixing against consumer interests.

The Bill allows for collective negotiation and bargaining on the terms and conditions of a scheme whereby services are provided to the public by members of a trade, profession or vocation and paid out of public funds. Section 3(2), for example, would deal with the position of the Irish Pharmaceutical Union. The Bill seeks to change the powers of the Competition Authority by amending section 4 of the Competition Act 2002 in such a way as to ensure that it does not undermine the right to collective bargaining and representation. It is the Labour Party's view that section 4 is in breach of European law and the International Labour Organisation conventions on the right to collective representation.

I believe the Oireachtas never intended section 4 of the Competition Act to be used to undermine trade union statute law and international human rights conventions. However, that is precisely the position at which we have now arrived. Unless section 4 of the Competition Act is changed, under current interpretations many workers will be deprived of some basic protections. At particular risk are those in atypical employment or people who have been forced into contract employment.

Sections 3(1) and 3(2) of the Bill specifically enable participants and providers in schemes of public provision paid for out of the public purse to be represented and to pursue collective agreements. It thus, to give a specific and current example, eliminates one of the fundamental stumbling blocks towards a resolution of the dispute between the HSE and the Irish Pharmaceutical Union. The introduction of this Bill is necessary for further reasons, as a means to make sense of, and improve upon, the Competition Act of 2002. If this Act, under the current interpretation of the Competition Authority, were to be applied with full force and effect to trade unions and their members, 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. The difficulties we now face arise due to the obsession with a narrow and hegemonic definition of competition by the Competition Authority as well as the Government and an apparent inability to apply any sensitivity or flexibility in circumstances where the notion of competitiveness is clearly misplaced.

The Labour Party is not opposed to competition. There is a role for competition in many aspects of life. There are also other areas where the guarantee of provision of a service constitutes any reasonable definition of a citizenship right. It is important that competition legislation be interpreted in such a way as not to undermine fundamental rights. There are areas in which the market cannot and should not be relied upon to provide services that are basic rights of a citizen in a decent society.

The Competition Act not only encourages competition between entities, but further strives to make such competition mandatory. In the view of the Competition Authority, any agreement or concerted practice that has the object or effect of distorting competition is null and void, a civil wrong and a criminal act. This includes any agreement on the terms and conditions on which work is to be done or services are to be provided. Happily, the European Court of Justice decisions clearly strike this down.

Statute law, since 1871, the Constitution and international human rights conventions, including ILO conventions, recognise the right to form trade unions. Further, collective bargaining by trade unions on behalf of their members is actively encouraged as a bedrock of social partnership. This is why the Taoiseach was promising it would be fixed up in the early stages of the social partnership talks, a commitment that came to nothing. Nevertheless, I hope this evening and tomorrow that there will be support for this amending legislation from all sides of the House.

The basis of the problem as I have outlined it is the fact that trade union activity is, at its heart, anti-competitive. Workers do not underbid each other to compete for jobs, nor should they be required to do so. Instead, they organise and bargain collectively so as to obtain the best outcome for all members and society. Again, organisations of professionals providing a professional service for a public scheme must be accorded the right to collectively suggest, deliver and achieve the best possible service.

I am appealing to all Members of the House to support this amending legislation. It addresses inequities that I like to believe were never intended in relation to the position of the most vulnerable of workers. It would also remove one of the obstacles to the resolution of a dispute that the members of the profession involved and the public in general are anxious to see resolved. I appeal for support for this legislation, which is a modest proposal to amend section 4 of the Competition Act to achieve these objectives.

Photo of Joe CostelloJoe Costello (Dublin Central, Labour)
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I thank Deputy Higgins for putting the Competition (Amendment) Bill 2007 on the Order Paper for discussion in Private Members' time today. This is not the first occasion on which he has raised the issue. He has been pushing this stone up the hill for many years and highlighting the issue in public at every opportunity.

Pharmacists are the latest group to have run foul of the Competition Act 2002. They are seeking an equitable and independent process for the determination of fees, services and contracts. They have a representative association, the Irish Pharmaceutical Union, IPU, which they want to represent them in negotiations with the HSE, the Department of Health and Children and the wholesale sector in relation to the cost of medicines. They are totally opposed to the present situation where the HSE seeks to unilaterally impose a price regime for medicines dispensed under the community drug schemes, namely, the medical card, drugs payment and methadone treatment schemes.

The cost cutting proposals from the HSE seek to make pharmacists responsible for the increasing cost of medicines to the State and penalise them accordingly. However, it is the Government that agrees the price of medicines with the pharmaceutical manufacturers. In fact, the rising cost of medicines is due to a range of factors such as the impact of the Government's decision to introduce the drugs payment scheme, the extension of medical cards to all persons over 70 years of age, the rising population and the very high cost of many new medicines, which for certain patients reduce the need for hospitalisation.

In my constituency, Dublin Central, the majority of patients attending pharmacies are participants in the community drugs scheme. They participate mainly in the medical card and drugs payment schemes, while others participate in the methadone treatment scheme. The latter incur high management costs and the scheme is often fraught with major security issues as regards pharmacy staff. Pharmacists have been the unsung heroes of the scheme. They have provided a community service when other professionals were and still are very reluctant to get their hands dirty. It is unconscionable that they should be expected to provide this service at a loss, which would be the effect of the new reimbursement proposals from the HSE if implemented, as threatened, from 1 December.

The Competition Act 2002, as Deputy Higgins explained, is a large part of the problem. It is high time the Act, section 4 in particular, was amended so as to avoid discrimination against various categories engaged in the production, supply or distribution of goods or the provision of services. Such persons are deemed to be self-employed and subject to the Act's anti-competition provisions. That is the nub of the problem. It is something of an anomaly that while they are entitled to seek trade union membership or can belong to a professional body, they are not entitled to have a trade union or professional association negotiate collectively or engage in full representative activity on their behalf. That is a narrow and outdated concept and a new formula is required.

As Deputy Higgins mentioned, Equity, the actors' and artists' section of SIPTU, has run foul of the Competition Act in its efforts to secure a minimum rate of pay for its members' services and performances. Strange as it may seem, the Competition Authority has deemed Equity's negotiations to be an attempt at price fixing and, therefore, anti-competitive. That is a ludicrous use of the Act. Similarly, the Irish Pharmaceutical Union has run foul of section 4 of the Act. The Pharmaceutical Distributors Federation, PDF, the wholesalers' representative body, refused to negotiate a price for its products on the grounds that these were contractual matters between individual retailers. The HSE then compounded the problem by avoiding the existing arrangements and deciding that its own consultation process, accompanied by an independent economic analysis, was the most appropriate means for the determination of new reimbursement arrangements for pharmaceutical suppliers. When the new cost saving reimbursement arrangements were announced on 17 September, effective from 1 December, there was naturally a cry of outrage from pharmacists the length and breadth of the country at this unilateral decision by the HSE. It threatened to make pharmacies unviable. Many small pharmacies were threatened and, therefore, the livelihoods of the pharmacists concerned. The new fee structure would mean pharmacists having to dispense medicines to 1.5 million medical card holders at a loss.

The Competition (Amendment) Bill 2007 would enable the Government to make a declaration that there is a public interest involved rather than an anti-competitive obstacle in negotiating a collective agreement between a public body and an organisation representative of the profession concerned. This would allow us to get away from the effects of section 4 of the Competition Act which is causing the problem. I urge the Minister to accept the Bill to remove the anomaly in the Competition Act and allow meaningful negotiations to begin to solve the pharmacies' problem.

Photo of Caoimhghín Ó CaoláinCaoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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On behalf of the Sinn Féin Deputies, I support this Bill and urge the Government not to oppose its passage to Committee Stage. If it has defects, then let those defects be rectified on Committee Stage. However, I believe it is sound in principle. It addresses a serious problem for an increasing number of workers, namely, the draconian use of the Competition Act to restrict the right of workers to organise and the right of organisations to represent their members.

We have a farcical situation whereby direct negotiations cannot be undertaken between the HSE and bodies such as the Irish Pharmaceutical Union and the Irish Dental Association, among others. These two cases have serious consequences for the public with the threat of major disruption of medicine supply under the medical card scheme and the withdrawal of thousands of dentists from the dental treatment scheme for medical card patients.

Today, we received further news from the IPU that the indirect talks are deadlocked. Once again, I urge the Minister for Health and Children to take a direct hand in this dispute which has dragged on too long and which could be resolved with some flexibility and imagination on the part of the Minister and certainly on the part of the HSE.

The use and interpretation of the Competition Act is one of the key difficulties in the dispute between the HSE and the IPU. The Act has wider ramifications across the economy which is why amending legislation such as this is necessary. Competition law is being used to attack the rights of freelance workers, in particular, actors, musicians, film crews and freelance journalists to be collectively represented. The Competition Authority treats these mainly low-paid workers as commercial companies and uses a measure designed to prevent price-fixing to attack their rights.

When the competition legislation was going through the Oireachtas, guarantees were given that this situation would not occur and the record of the House shows this to be the case. However, the Government adamantly refuses to amend the definition of employee in the Industrial Relations Acts in order to rectify this situation. The Government is refusing to act as workers rights are being trampled upon.

For a long time, trade unions have been campaigning to have this situation addressed. The Government's failure to act is testament to its lack of commitment to the protection of workers' rights. It is evidence of the inherent conflict of interest which exists within the Department of Enterprise, Trade and Employment as a result of having incompatible responsibilities for both enterprise policy and labour affairs.

This is why Sinn Féin used our Private Members' time in the last Dáil to demand the establishment of a stand alone Department of labour affairs to decouple labour affairs from enterprise and address this conflict. This would ensure that appropriate priority and focus is given to the protection and promotion of workers' rights.

Sinn Féin employment spokesperson, Deputy Arthur Morgan, met with representatives of SIPTU, the NUJ, Irish Equity Group and the Musicians Union of Ireland to discuss the fact that competition law is being mischievously used to attack the rights of workers. Deputy Morgan later sought to secure a debate on the Adjournment on the matter. The union representatives made clear that the wages of the low-paid vulnerable workers they represent are being undermined by the dubious interpretations of competition law by the Competition Authority.

Since 1901, all Irish people have had the legal right to form trade unions and to take collective action without getting sued for breaking their contract of employment. This was a hard-won right over generations. It was vindicated by workers in successive struggles, including the great lockout of 1913. More recently, the Government signed the International Labour Organisation's declaration on fundamental principles and rights at work, a binding international treaty which commits the Irish State to respect those basic trade union rights.

However, during recent years, the Competition Authority has begun to treat self-assessed workers, including actors, musicians, film technicians and freelance journalists, as though they were private companies. More and more workers are being denied trade union representation because of what is clear to me and to most people in the country is a flawed interpretation of their status. They are not limited companies.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Hear, hear.

Photo of Caoimhghín Ó CaoláinCaoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Irish Equity was forced to sign an undertaking that the union would not negotiate fees for actors working on commercials for private companies. The result is that many have suffered serious wage cuts, while being denied trade union representation — a basic and fundamental right — on their behalf.

According to European Union competition law, which is on the statute books of all member states, companies may not work together in any way which might make them less competitive. Cartels, or groups of companies which agree to charge the same prices, are banned. The object of this legislation is to prevent price fixing and the development of monopolies. Neither Brussels nor the Irish Government ever intended it to undermine workers' trade union rights.

However, by creating the fiction that self-assessed workers are commercial companies, the Competition Authority has done just that, targeting some of the most vulnerable sectors of the workforce in the process. Other EU countries have introduced special protection for self-assessed workers but the Irish Government has not yet done so. Therefore, some Irish citizens are losing a basic right because the Government has failed to enshrine the necessary protections in our laws.

What does this mean in practical terms for workers? I will outline some examples cited by the unions. The NUJ cannot publish a fees guide for its freelance photographers and reporters. Except where named musicians are being engaged, the Musicians' Union is also prohibited from telling its members what is the "going rate" for a performance. Irish Equity is prevented from negotiating with advertising companies, even those who want to negotiate a performance rate with the union.

This is all being done in the name of efficiency and competition. However, it serves neither. The Competition Authority is wrong in its interpretation of the relevant EU directive and it actually criminalises employers and unions for collectively negotiating fees or rates for these workers. This will happen, even if the employer finds it administratively convenient to hammer out a rate with the union, and many do.

Efficiency has nothing to do with the matter. The Competition Authority's action against these workers will not improve matters for the consumer. Most competition increases the powers of the buyers, the citizen and consumer, against those of the sellers, mostly big companies. However, in the case of the misuse of competition laws against workers, the buyer is the big company and the seller is an isolated actor, musician, film technician or freelance journalist. I used this area because it is unlikely to be addressed in any greater depth during the course of these two days of debate.

It is important to make clear that EU law does not prevent the Government and the Oireachtas from taking action to solve this problem. The Government has it within its gift and should take action. It has an opportunity presented to it and it should allow the passage of this Bill and work with the Opposition on Committee Stage to ensure the passage of legislation which restores the original function of competition law and stops its misuse to exploit workers. I appeal to the Government to accept the validity of the arguments presented this evening by the Labour Party, and those of us who will support it, which were so eloquently put by the proposer of the Bill, Deputy Michael D. Higgins.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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I welcome the opportunity to speak on this Private Member's Bill which seeks to establish the rights of self-employed individuals to be represented by a trade union for the purposes of collective bargaining. It also proposes to allow the representative body of any profession to enter into collective negotiations with a public body in respect of services provided to the public by members of the profession where those services are publicly funded.

While these provisions are well-meaning, I am concerned that they have far-reaching consequences which may go further than intended. While I accept elements of the Bill have merit, as a Minister of State at the Department of Enterprise, Trade and Employment, which has responsibility for competition and consumer policy, I cannot ignore the anti-competition and anti-consumer consequences.

Prior to addressing the specific provisions of the Bill, I want to emphasise that the effective promotion of competition in the economy is not possible without an effective legal framework. Sound competition legislation contributes to our competitiveness by penalising anti-competitive and anti-consumer behaviour and protecting the competitive process in all sectors of the economy.

The Government continues to consider competition as the life blood of a vibrant economy and we are committed to removing unwarranted constraints on competition in all sectors of the economy and placing the consumer at the top of the policy agenda. Increased competition in the economy has a critical role to play in helping to keep prices under control. An example of this is the aviation industry in which competition from low cost airlines has substantially reduced the cost of air travel. While much needs to be done to encourage competition in some sectors of the economy, the Government is working hard to bring about these changes.

The Government also recognises that restrictions on competition arising from regulations can impose substantial costs on the economy and have adverse effects on the international competitiveness of Irish business. In this regard, the Government is committed to addressing sectors where barriers to entry or restrictive practices exist. Our commitment to better regulation stems from the recognition that if State regulation is excessive in quantity or is of poor quality, it will be an unnecessary burden on economic and social activity. By minimising regulatory barriers, we can make it easier for entrepreneurs to avail of business opportunities and enter markets and we can achieve greater efficiency and choice for consumers.

A practical example of the Government's commitment to foster competition can be seen in the revocation of the groceries order by way of the Competition (Amendment) Act introduced by my colleague, the Minister for Enterprise, Trade and Employment, Deputy Micheál Martin, last year. The groceries order was abolished primarily because it allowed wholesalers and suppliers to determine minimum retail prices charged to consumers, thereby seriously constraining price competition in the grocery trade. The purpose of its removal was to introduce greater competition into the grocery trade by allowing retailers freedom to determine the prices they charge their customers.

The 2006 Competition (Amendment) Act also strengthens the existing provisions of the 2002 Act by continuing to prohibit certain practices previously prohibited by the groceries order. These include the imposition of resale price maintenance in regard to the supply of grocery goods; unfair discrimination in regard to the supply of grocery goods; retailers or wholesalers of grocery goods compelling or coercing suppliers into payment of advertising allowances; and retailers compelling or coercing suppliers into payment of "hello" money.

Following the removal of the order, the selling of grocery products below cost is not an offence, nor is there any reason to believe below cost selling of itself acts against the interests of consumers or is in any sense anti-competitive. The use of aggressive pricing strategies is a perfectly legitimate marketing tool and the normal outcome of the competitive process.

It is important that we remind ourselves that competition law is designed to promote consumer welfare and protect competition. Anti-competitive practices such as price fixing are essentially theft with the consumer being the innocent victim. The development of a strong competition culture is therefore essential from both a consumer and business perspective. The economy, too, will benefit from open competitive markets. The positive effect that competition has on consumers has two sides. Not alone do companies who compete with each other to win our business reduce prices, provide enhanced service and variety and generally become more responsive to our needs, competition drives companies to cut their costs and find more innovative, efficient and productive ways of doing business. This less visible effect of competition is no less valid.

If competition were just about cutting prices, it would bring important benefits. However, when we take account of the effect of competition on cutting costs, the effects are much more substantial. Lower costs and greater efficiency bring further price cuts for consumers but, more important, they mean higher productivity growth for the economy as a whole. When the companies in question export, the higher productivity they enjoy from competition at home makes them more competitive abroad.

In recent months, concerns have been raised regarding difficulties around negotiations between public sector bodies and service providers. The Competition Act 2002 consolidated, reformed and modernised previous legislation relating to competition policy and merger control. In essence, the 2002 Act increased the penalties for serious cartel activities, such as price fixing, enhanced the independence of the Competition Authority and transferred responsibility for controlling mergers and acquisitions from the Minister to the Competition Authority, with the Minister for Enterprise, Trade and Employment retaining a residual function in media mergers.

The 2002 Act was the culmination of a root and branch review of all aspects of competition law in the State undertaken by the competition and mergers review group. The review group, which reported in 2000, comprised eminent lawyers, economists and representatives from across the economic spectrum, including the social partners. The 2002 Act implemented many of the recommendations of the review group and anticipated developments at EU level. In particular, it provided a framework for the application of Regulation 1 of 2003 in the State, whereby the authority was enabled to fully apply the European Community competition rules.

Section 4(1) of the 2002 Act sets out the general prohibitions on anti-competitive agreements, decisions and concerted practices and reflects Article 81 of the EC treaty. Section 5 prohibits the abuse of a dominant position and reflects Article 82 of the EC treaty. Predatory pricing is a practice that is considered, both in national and international competition law, to constitute the abuse of a dominant position and is prohibited by both section 5 of the Competition Act and Article 82 of the EC treaty.

The previous 1996 Competition Act, which created criminal offences for breaches of competition law, provided for an "ignorance defence" if the defendant did not know, nor could be reasonably expected to have known, that the effect of the agreement, decision or concerted practice concerned would be the prevention, restriction or distortion of competition. Under the 2002 Act, this ignorance defence was abolished. The 2002 Act also created new offences for breaches of Articles 81(1) or 82 of the EC treaty to facilitate the enforcement of EU competition law in Ireland in line with recommendations of the competition and mergers review group.

An important provision in the Competition Act is that there are different categories of offences. "Hard-core cartel" offences are regarded as extremely serious and could result in a custodial sentence. These offences are defined as agreements, decisions or concerted practices involving competing undertakings, the purpose of which is to directly or indirectly fix prices with respect to the provision of goods or services to persons not party to the agreement, decision or concerted practice; limit output or sales; or share markets or customers. This reflects a more economic approach to competition law enforcement whereby certain offences are regarded as being unequivocally harmful to consumers. Other offences, particularly those relating to vertical agreements, are less seriously restrictive of competition.

Section 6(2) introduced a presumption which applies in the prosecution of the more serious offences. This obliges the court to presume, unless the defendant can prove otherwise, that the object of the agreement is to prevent, restrict or distort competition. All other section 4 and Article 81(1) offences and all breaches of section 5 and Article 82 are treated as less serious. The penalties are lower and this presumption does not apply.

The 2002 Act also established the Competition Authority on an independent statutory basis. The Irish Competition Authority is one of the most proactive and successful enforcement agencies of competition law in Europe. It was also the first enforcement agency in Europe to secure a criminal conviction before a jury for a competition offence.

I will comment briefly on the nature of investigations by the Competition Authority. The authority's experience of investigating "hard-core cartel" activity, such as price fixing, bid rigging and market sharing, is that it is a slow and time consuming process. Cartels are by their nature conspiratorial. Participants are secretive and "hard-core cartels" are notoriously difficult to detect and prosecute successfully. The evidential standard for indictable offences is onerously high with a "beyond reasonable doubt" burden of proof on the prosecutor. Following investigation, the authority is then required to prepare a file for the Director of Public Prosecutions, after which the preparation of a book of evidence can take several months. Following a decision by the DPP to proceed with a prosecution, the authority assists and works with the DPP, the Chief Prosecution Solicitor, legal counsel and the Garda Síochána in preparing a case for trial.

As the enforcer of competition law, the Competition Authority has been successful in tackling hard-core anti-competitive practices. Last year alone, 15 criminal convictions were secured in a home heating oil case in the west, while a further two convictions were secured this year in connection with this cartel. Proceedings in respect of two more defendants in this case are ongoing.

Following a detailed examination into alleged price fixing in the car market, a businessman pleaded guilty earlier this year to charges of aiding and abetting the Irish Ford Dealers Association and its members in implementing an agreement which had the object of preventing, restricting or distorting competition in the motor trade so as to directly or indirectly fix the selling price of cars.

These cases constitute major successes for the authority——

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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May we anticipate that the Minister of State will, at some point, address the abuse of section 4?

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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——and combined with the authority's cartel immunity programme and the recruitment of gardaí to the ranks of the authority should send a clear signal to anyone considering price fixing or cartel membership or participation that this type of anti-competitive behaviour is not acceptable and competition law will be enforced in this regard.

In addition to these criminal cases, the authority also pursues anti-competitive behaviour by way of civil action. Since 2002, the authority agreed settlement terms in 15 cases without the need to initiate legal proceedings and has settled 14 cases prior to the cases going to a hearing. A further three cases proceeded to a hearing.

In addition to confronting hard-core criminal activity, the authority, via its advocacy role, plays a proactive role in tackling other anti-competitive practices and restricted legislative shelters. Under the provisions of section 30 of the Competition Act 2002, the authority may "study and analyse any practice or method of competition affecting the supply and distribution of goods or the provision of services or any other matter relating to competition".

On foot of a 2001 OCED report, regulatory reform in Ireland, which suggested that competition in the professional services sector in Ireland could be stronger, the Competition Authority undertook a study of eight professions: engineers, architects, dentists, optometrists, veterinary surgeons, medical practitioners and solicitors and barristers. In respect of each of these professions, the authority's strategy was to first release a preliminary report containing initial proposals for improving competition and thereby allowing a period of consultation with interested parties before the publication of a final report. To date, studies of six professions have been completed, while the remaining two studies on veterinary surgeons and medical practitioners are expected to be published in 2008.

The authority has also produced reports on the liquor licensing laws, published in September 1998; the bus and rail passenger transport sector, published in 1999; the casual trading sector, published in 2002; the insurance market regarding non-life insurance, published in March 2005; the banking sector in Ireland regarding non-investment banking, published in September 2005; and competition in the private health insurance market, published in January 2007.

The recommendations contained in a number of the reports produced have been generally welcomed by those to whom they are addressed. While the authority has no legal basis to "require" the implementation of its final recommendations, it regularly reviews the position in relation to implementation. As part of that process, it engages with all those to whom recommendations were directed with a view to progressing their implementation.

At this point I wish to stress the importance of the public's role in assisting the Competition Authority's campaign to stamp out anti-competitive behaviour. In order to stop anti-competitive behaviour, the authority needs to be aware that abuse is taking place and this is where the public has a role to play via the authority's complaints mechanism. The authority has substantial powers to investigate complaints if it has reasonable grounds for suspecting that a breach of competition law has taken place. When the information provided through complaints is sufficient to give the authority reasonable grounds for suspicion, a formal investigation may be launched. Where information does not point towards a breach of the law, it may inform other aspects of the authority's work, for example, the review of statutory regulations which may have unintended anti-competitive effects.

I understand the history of the Bill stems from a 2004 decision by the Competition Authority in which it took a view that self-employed actors were "undertakings" within the meaning of the 2002 Competition Act. For the record, "undertakings" mean "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". As I said earlier, section 4 of the 2002 Act forbids all agreements that have as their object or effect the prevention, restriction or distortion of competition, including price fixing, and in doing so it reflects the provisions of Article 81 of the EC Treaty.

Following the authority's investigation into possible price fixing among self-employed actors and advertising agencies, it took the view that an agreement between the Irish Actors Equity SIPTU branch, on behalf of actors, and the Institute of Advertising Practitioners in Ireland, on behalf of advertising agencies, breached the provisions of section 4 of the Competition Act.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Disgraceful.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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Following the authority's findings, Equity and the institute undertook not to enter into or implement any agreement that directly or indirectly fixes the fees that the institute or its members pay self-employed actors in return for services rendered. I understand that neither party challenged the authority's decision in court at that time or since. While the authority enforces the legislation it is, and always has been, the courts who definitively interpret the law. I would like to state clearly that the right of a trade union to represent employees in collective bargaining with their employers is not and never has been called into question by the authority.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Yes, it has.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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A difficulty does arise, however, when a trade association acts on behalf of self-employed contractors and in such instances the trade union mantle cannot exempt the association from what is, in effect, price-fixing negotiations.

I would like to reflect at this point on our industrial relations system. I believe that we are very fortunate in terms of the industrial relations systems we have developed together in Ireland. The fundamental approach of successive Governments to industrial relations has been one of voluntarism. There is a consensus among the social partners that the terms and conditions of employment of workers are best determined through the process of voluntary bargaining between employers and workers and between employers' associations and one or more trade unions. This approach to industrial relations has served us well over the years.

In general, our laws do not try to impose a solution on parties to a trade dispute, but rather are designed to help support the parties in resolving their differences. The State has, by and large, confined its role to underpinning voluntarism through the provision of a framework and the industrial relations institutions that can assist in the resolution of disputes between employers and workers and through which good industrial relations can prosper. The capacity to resolve workplace disputes effectively contributes to the quality of the working environment and has a significant impact on organisational performance in terms of reducing days lost, enhancing productivity and improving management-employee relations.

The Government is focused, through its investment in dispute resolution machinery, on making a real difference to the conduct of industrial relations in the country. A key feature of that investment has been the Labour Relations Commission. The commission has been a very successful organisation, whether judged from the perspective of dispute settlement or from the perspective of dispute prevention.

The record of success in dispute resolution is clear from the available data which shows that the conciliation services division consistently settles about 80% of all cases referred to it. By the same token, the Rights Commissioner Service, currently dealing with very significant growth in demand for its services, resolves the vast majority of all cases referred to it.

The Labour Court also plays a key role in contributing to the stable industrial relations climate in Ireland. The court's excellent reputation is built on the maintenance of high standards and a commitment to quality customer service.

We are all aware, however, that effectiveness in dispute resolution is not the whole story in making a difference to the conduct of industrial relations. The key to the long-term health of an industrial relationship is, on the one hand, for parties to take the steps necessary to ensure that the relationship is effective and, on the other, that they can resolve differences themselves when they arise. The dispute resolution bodies have long understood this reality and have helped parties to industrial relationships right across the country to develop good communication mechanisms and good in-house dispute prevention and resolution arrangements. Social partnership has played an important, if not pivotal, role in Ireland's dramatic economic and social development since 1987.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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The social partners favour this legislation.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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During the past 20 years, the successive social partnership agreements have reflected the unique challenges and opportunities of their time, and injected a substantial measure of stability and confidence for all sectors of the community, including investors. It has created and sustained the conditions for remarkable employment growth, fiscal stability, restructuring of the economy to respond to new challenges and opportunities, a dramatic improvement in real living standards, through both lower taxation and lower inflation, and a culture of dialogue which has served the social partners but, more importantly, the people of this country very well.

All social partnership agreements have included provisions for the orderly processing of grievances and disputes and frameworks dealing with industrial peace and the pursuit of industrial action in regard to matters covered by the agreements. An indication of the impact of this aspect of the agreements is given by the trend over the period of reduction in days lost because of industrial action, from 260,000 days in 1987 to less than 7,500 days in 2006, the lowest since records began in 1923. CSO figures for the third quarter of 2007 show that no work days were lost as a result of industrial disputes during that period. While there can be no room for complacency, these statistics reflect the stability of the industrial relations environment and the increased willingness of employers, workers and trade unions to resolve potential disputes either at workplace level or, if necessary, through the utilisation of the available dispute settling services, such as the Labour Relations Commission and the Labour Court.

In addition, institutions of social partnership play a significant role in ensuring delivery of the industrial stability and peace provisions of the national agreements. In this context, the national implementation body serves as a forum where the Government, employers and trade unions can work together to help ensure a positive industrial relations climate for economic and social progress.

Needless to say, social partnership was not solely responsible for the dramatic turnaround in our economic and social fortunes, but it was a key factor because it enabled us, Government, employers, trade unions, farmers and the community and voluntary sector, to develop a consensus about the overall direction of our economic and social policy and to work together to achieve our shared vision of the future.

Our model for partnership is unique and adapted to Irish needs, enabling us to manage rapid change successfully and build on support for the changes necessary to meet our economic and societal goals of growth and employment. To remain a competitive, growing economy, with the capacity to improve our social provision, we must continue to build on what social partnership has achieved for us. Over the past 20 years or so, if we have learned anything, it is that a shared analysis of the issues coupled with a problem-solving approach has worked.

The Deputy is concerned with the effect the authority's decision in the Irish Actors Equity case has on the livelihood of freelance artists and the Competition Authority's decision has, in the past, been called a "distorted version of the pursuit of competition... used to undermine the rights of Trade Unions and their members". However, the Bill before us today is, in effect, championing price fixing, which is a serious crime carrying a maximum prison sentence of five years.

8:00 pm

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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On a point of order, I ask the Minister of State to withdraw that allegation, which is entirely improper. He is suggesting on the record of the House that I am in favour of an illegal action. He stated: "However, the Bill before us today is in effect championing price fixing, which is a serious crime carrying a maximum prison sentence of five years." It is as disgraceful as it is inappropriate. It is a cheap, wrong allegation, and for the purpose of the House, the Minister of State should withdraw it.

Photo of John O'DonoghueJohn O'Donoghue (Kerry South, Ceann Comhairle)
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The Deputy is well aware that is not a point of order.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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It is a distortion.

Photo of John O'DonoghueJohn O'Donoghue (Kerry South, Ceann Comhairle)
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I am not responsible for what the Minister does or does not say.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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It is a disgrace.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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He should withdraw it.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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Earlier this year, when sentencing a motor car dealer for fixing the selling price of motor vehicles, Mr. Justice Liam McKechnie said that this type of crime was a crime against the consumer and there are good reasons as to why a court should consider the imposition of custodial sentences.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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The Minister of State should be ashamed for making that analogy.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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Who is setting the price?

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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I want to take the opportunity to correct a number of misconceptions contained in the explanatory memorandum which accompanies this Bill. According to the explanatory memorandum, if the Competition Act applied with full force to trade unions and their members, 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 reiterate that the 2002 Act applies only to undertakings and associations of undertakings. For the greater part, trade union members are employees, not undertakings, and in the view of the Competition Authority, trade unions representing employees would never, when acting in that capacity, be considered as associations of undertakings.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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What of workers who are available for victimisation?

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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The explanatory memorandum also raises the issue of atypical employment, which is difficult to characterise. Generally, such arrangements run the spectrum from pure self-employment to pure employment and everything in between.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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That is deep.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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In effect, the Bill seeks an exemption from the Competition Act for all individuals who contract with undertakings.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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It does not.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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Does the Deputy realise that as a result large elements of the service economy would be exempted from the provisions of the Competition Act? What this would mean, in effect, is that members of professional bodies such as barristers, solicitors and architects, to mention just a few, could band together, add "union" to their name and apply for a negotiating licence under trade union legislation.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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That is rubbish.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Section 3(2) states that the Government makes a public declaration about a public interest.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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Whoever wrote the speech does not understand the Bill.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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They could then legitimately under Irish law get together to fix prices for their services. I am sure the Deputy does not intend that the protections afforded to consumers by the Oireachtas in the Competition Act could be circumvented in this manner.

It is important that the Bill is considered in the wider EU context and not purely from an Irish competition policy context. In this regard, a particular concern relates to the interaction of the Bill with established European jurisprudence in the area of competition law which has defined the concept of an undertaking as any entity engaged in an economic activity——

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Including the cases decided this week, which support it.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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——regardless of its legal status and the way in which it is financed. Similarly, it has defined an economic activity as "any activity consisting in offering goods and services to a given market". The Commission in following this wide definition has taken the view that it includes any activity directed at trade in goods and services, irrespective of the legal form of the undertaking and regardless of whether or not it is intended to earn profits. It is the person's or body's engagement in commercial activity which makes it an undertaking for the purposes of competition law and the pursuit of profit is not essential. In practice, the definition of undertaking has been taken to include companies, self-employed persons, including performing artistes, agricultural co-operatives and sports associations.

I am aware, for example, of a particular 1978 European Commission case, the RAI-UNITEL case, in which the Commission found opera singers to be undertakings.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Pavarotti is now an undertaking. That is really advanced.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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In this case the Commission took the view that "artistes are undertakings within the meaning of Article 85(1), now Article 81(1), when they exploit commercially their artistic performance".

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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What about the cases of 2007 such as the Viking case and the Laval case?

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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They did not know about them when they were writing this speech.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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There is also potential for an anomalous position to arise whereby self-employed persons could be exempt under Irish competition law yet such persons could be in breach of Article 81 of the treaty. The preamble to the 2002 Act states that it is "An Act to make new provision, by analogy with Articles 81 and 82 of the Treaty..." The current wording of section 4 of the Competition Act is taken from the wording in Article 81(1) of the treaty. Section 6 of the Act creates an offence for breach of both section 4 of the Act and Article 81 of the treaty, while section 8 sets out the penalties for a breach of both section 4 and Article 81.

The Act also anticipated Council Regulation 1 of 2003 which made European competition rules directly applicable in member states. Article 3 of that regulation requires the national competition authorities and national courts to apply Article 81 when they apply national competition law to agreements which may affect trade between member states.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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This is fundamentalist rubbish.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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Because section 4 reflects Article 81, the delimitation of section 4 of the Act contained in section 2(1) of the Bill, if enacted, could result in Irish competition law being inconsistent with EU law, and could place the courts in the unusual position of exempting undertakings under Irish law while punishing them under EU law.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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The European Court of Justice this week ruled on exactly the same grounds as this Bill.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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I cannot imagine that the Deputy intended to introduce a system whereby European law would have effect but not Irish law.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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That is a baseless allegation. I thank God I do not have to read out such rubbish.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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I do not consider it appropriate to debate the issues identified in this Private Members' Bill in isolation from an on-going review of the Competition Act. During the Dáil debate on the Consumer Protection Act early this year, Deputies may recall that the Minister, Deputy Martin, indicated that he intended reviewing the operation of the 2002 Competition Act and that he would bring forward proposals for legislative change where warranted.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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The review champion.

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)
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In October, the Minister 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, my Department 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 the year has been set as the deadline for receipt of all submissions.

I ask the House to oppose this Bill and to allow the proposals contained in it, including their wider EU implications, to be fully examined in the context of the overall review of the operation and implementation of the 2002 Competition Act.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I wish to share my time with Deputies James Reilly and Jimmy Deenihan.

Photo of John O'DonoghueJohn O'Donoghue (Kerry South, Ceann Comhairle)
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Is that agreed? Agreed.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I acknowledge the bona fides of the Labour Party in presenting this Bill. It is a genuine effort to address genuine hardship for some individuals such as self-employed members of Equity, the NUJ and others. Similarly, I acknowledge the efforts the Labour Party is seeking to provide a means through which professional groups such as dentists, pharmacists and general practitioners can negotiate with Government for public services. However, despite this, neither I nor Fine Gael can support the Bill on a number of grounds, both to do with the ultimate policy implications of the Bill as drafted and legal flaws within it.

The explanatory memorandum suggests that section 2 has been brought in to facilitate Equity. However, the Bill does not refer to Equity and rather uses a broad-brush measure, section 2(1)(a), which effectively proposes to legalise across the board horizontal price fixing by trade associations at the expense of business groups and social partners. If this provision were enacted, it would be possible, for example, for architects to club together and demand a fixed price for services provided to particular contractors. Bricklayers could form a union and demand negotiations with the Construction Industry Federation for particular rights, such as double pay on Sundays. Casual farm workers could form a union in, say, the midlands and insist on negotiations with the IFA and farmers to give them particular employee rights while continuing to enjoy the benefits of being self employed.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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What about the public interest?

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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When I refer to that, the Deputy will hear it. I am just dealing with section 2 of the Bill.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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That section is qualified.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I am coming to that. I did not interrupt the Deputy. Perhaps he could have the decency to contain himself for at least one debate.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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We are fed up with the views coming from the Deputy.

Photo of John O'DonoghueJohn O'Donoghue (Kerry South, Ceann Comhairle)
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Deputy Varadkar is entitled to express his view.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I am. This is a democratic country, left or right.

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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The Deputy is very "right".

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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Instead of competing for business, electricians in a town could form a union to negotiate terms, conditions and fees with local shopkeepers and enterprises. The Bar Council and the Law Society could similarly fix prices, terms and conditions for services provided to any social partnership group. This Bill is potentially a Trojan horse and if implemented would see a return of the medieval guild system of collective bargaining whereby architects and other professionals were required to form guilds in order to negotiate set prices for services, as well as creating barriers to others entering those services.

The Bill abolishes competition law to the extent that it applies to the self employed. As stated by the Competition Authority decision in the Equity case, if one were to take a wooden approach and find that all trade union members were exempt from the Act, the protection afforded to Irish consumers by the Oireachtas in the Competition Act 2002 could easily be rendered illusory. An association of independent pharmacists, publicans and barristers, to name but a few, would shortly obtain safe havens for their members by adding union to their name and obtaining negotiating licences. At the same time it is even possible that traditional companies could redefine themselves as partnerships and corporate bodies. Let us bear in mind that the Labour Party Bill does not just refer to individual self-employed people and unions, it talks about giving these rights to partnerships and corporate bodies. Traditional businesses could redefine themselves as collections of partnerships and corporate bodies and then use that provision to exempt themselves from competition legislation in the context of section 2.

Section 3 seems to be written with the intention of resolving the IPU-HSE impasse. I commend the Labour Party for seeking to resolve this problem but I do not believe this is the correct means to do so. However, despite the apparent intention, there is no specific mention of the IPU or similar organisations either in the Bill or the explanatory memorandum. The provisions of this section are very odd indeed. Essentially, it legalises price fixing in circumstances where the Government negotiates with an organisation representing a profession or trade for the provision of a service to members of the public or to a class of members of that public. The mechanism for achieving this is to empower the Oireachtas, following a declaration of the Government, to deem such an organisation not to be an association of undertakings for the purpose of section 4 of the 2002 Act. This exemption would not only be open to sole traders and independent professionals but also to members and employees of partnerships and corporate bodies under section 3(5)(b).

In sections 2(2) and 3(3), the Bill seems to try somehow to exempt consumers, stating that it is okay to fix prices against the Government, businesses or farmers but it is not allowed against consumers. While I am sure the Labour Members are well intentioned in this regard, this is naive. If one is allowed to fix prices with one's major business or customers there will obviously be a knock-on effect. For example, if electricians are allowed to fix prices with shop keepers and demand that they get a certain rate for an order to fix lights in SPAR or Londis, the knock-on costs of that will fall on the shops' customers. Equally, the fact that electricians can get fixed rates from their best customers will lead to higher rates for ordinary consumers. One cannot just write that into a Bill and think it will not happen. The naivety is really breathtaking.

The effect of this Bill would be to set back competition law by 15 years. Despite its intent, it is little more than a charter of rights for cartels, allowing groups of sole traders and partnerships or corporate groups as diverse as barristers, publicans, electricians and vets to establish a union, gain a negotiating licence and seek to fix prices with major customers and Government. Less competition in these areas will inevitably lead to higher prices for consumers and increased liability for the taxpayer.

My party has consistently sought to highlight the case against the Government on the issue of inflation. In particular, we focused on the high levels of inflation in Government-controlled sectors and sheltered sectors of the economy. Unfortunately, this Bill would undermine that view and thus it would be hypocritical of us to support it. It would be bad both for consumers and taxpayers. It stands contrary to our party's proposals in the lead up to the election to strengthen the Competition Authority with the power to impose fines for violations and to allow the authority to make legally binding civil decisions. This is a clear example of hard cases making bad law. Speaking on the original Competition Bill in 1991, Peter Barry got it right when he said that any exception to the Act should be explicit, rather than relying on the future interpretation of inexplicit phrases.

Further to these presumably unintended consequences of the Bill, we see a number of gaping holes and obvious legal flaws in it. Fundamentally, if enacted, the Bill would be of no benefit whatsoever to groups such as Equity or the IPU. It would not alter Article 81 of the EC Treaty or Regulation 1 of 2003, both of which must be applied by the Competition Authority and the courts regardless of the provisions of the Competition Act. It must also be remembered that the authority's rulings are based on Article 81 of the EC Treaty, not the Competition Act.

Large sections of the explanatory memorandum are deeply misleading. There is a suggestion that if the Competition Act were applied with full force and full effect it would result in trade union leaders being prosecuted as parties to a criminal conspiracy. To paraphrase the Labour Party leader, this is poppycock. Deputy Higgins referred to a number of recent cases but I would refer him to Grealy v. the Department of Education and Science, which made it clear that this was not the case. This should be known by people putting forward this type of legislation.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Why does the Deputy not quote from the European Court of Justice cases this week?

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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The Deputy thinks he is awfully smart.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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Furthermore, the authors seem to disregard the separation of powers. It is most unorthodox for a Government to be able to make a declaration to exclude the effects of an Act for a particular body. The normal course would be to give authority to the Minister to make regulations by statutory instrument in line with specific criteria laid down in law.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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The Deputy said it was in the public interest.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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The Competition Act is an advocate of competition and acts as a prosecutor; it is not an arbiter of the law. The final interpretation of law is a matter for the courts. The Bill assumes that the Competition Authority ruling in the Equity case is the law, which is not necessarily so. This also applies to the Attorney General's advice given to the Government with regard to HSE negotiations with the IPU, IMO and IDA. This year, the Supreme Court ruled against the Competition Authority and representative services on behalf of its members in a case taken by the Irish League of Credit Unions.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Yes.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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In that case, the Supreme Court determined that the representative services of the ILCU on behalf of its members were not economic activities——

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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That is right.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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——and therefore were not covered by the Competition Act. Surely something like the Equity case or the HSE decision to follow the Attorney General's advice should be legally reviewed before changing the Act. That is the obvious course of action.

There are a number of other means to resolve some of the problems which Labour Deputies have mentioned. With regard to Equity and similar issues concerning, in many cases, exploited self-employed workers, it may be appropriate to expand the protections to individuals in such employment — for example, to extend minimum wage benefits, other employment protections, PRSI benefits and PAYE allowances to self-employed contract workers. That kind of legislation would be warmly welcomed by Fine Gael. I urge the Minister to give consideration to such legislative changes.

In the case of pharmacists and general practitioners — and I am saying this as a member of the IMO — exemptions such as Article 81 can be sought and approved of on the grounds of a service's economic interest, which may potentially apply in this instance. In addition, there are other means by which the IPU dispute can potentially be resolved without this Bill. I note that in an e-mail to Deputies and Senators today the IPU's chairman, Michael McGuckian, proposed that talks on a new pharmacy contract under an independent chairperson should commence immediately. He stated that the purpose of these talks would be to reach an agreement on all aspects of the contract, including an appropriate pricing structure for the delivery of pharmacy services. This had been previously agreed with the HSE at a meeting in November. When agreement is reached on an appropriate pricing structure the matter can then be referred to the proposed new arbitration system which the Minister for Health and Children alluded to in the Dáil on 21 October 2007.

Fine Gael supports this suggested approach, although the matter of detailed structuring may have to be dealt with entirely by the arbitration system. The adoption of this suggested system would render the Labour Bill both irrelevant and redundant. However, other mechanisms could be considered; in particular the use of messenger model systems as are used in the United States in similar circumstances, or perhaps even the creation of a specific objective in law as is done in Canada.

While we in Fine Gael have concerns in respect of this Bill, it is motivated by genuine reasons and I respect the motives of the Labour Members in this regard. The failure of the Government to tackle issues concerning exploited self-employed people such as actors and journalists deserves no support. Equally the HSE's refusal to explore real mechanisms to negotiate with GPs and pharmacists deserves no congratulations. Fine Gael will abstain on the vote tomorrow.

Photo of James ReillyJames Reilly (Dublin North, Fine Gael)
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I thank my colleagues in the Labour Party for bringing this issue to the floor of the House. Although it is not the first time for a Bill of this nature to come before the House, this one has come about primarily because of the situation pertaining to the threatened cessation of pharmaceutical services throughout the country. Clearly the issue has been that the HSE has used the Competition Authority as a means not to negotiate with them or to allow them to be represented by their union. Their union was formed many years ago and it serves a useful function because it allows negotiations to take place between the State and pharmacists. When those negotiations are concluded the State can depend on the union to ensure that pharmacists will abide by the arrangements.

I am not sure what the Government or the Competition Authority are proposing in the current scenario. Are they proposing that individual pharmacists should do individual deals with the HSE? They must surely realise this would result in areas having no service because pharmacists would not be prepared to engage with the HSE under the terms on offer, while it may be successful in other areas. Will it lead ultimately to the closure of many rural pharmacies, further undermining rural communities that have suffered enough following the removal of many other services? If this continues, how will the Government engage in further roll-outs of services with other professionals?

Many dentists have pulled out of the dental scheme. They have not done so in a co-ordinated, concerted fashion but they have drifted away from the scheme. Their union cannot negotiate a change in terms and conditions and the dentists are walking away from what they see as a loss leader. The same will happen with pharmacists. How will future arrangements be put in place with general practitioners to roll out cervical screening or with chiropodists if the diabetes programme is rolled out nationally or with physiotherapists and so on? These are all areas of activity where because of a quirk in the law the professionals involved are independent contractors as opposed to employees. Most people cannot come to terms with the fact that consultants can be recognised and are represented by a trade union because they are employees but general practitioners, dentists, chiropodists, physiotherapists, pharmacists and actors cannot. This is inequitable and something needs to be done about it.

Unfortunately, I must apologise because our legal opinion does not permit my support of the Bill. I sought legal opinion independent of Fine Gael which concurred with advice received by my party. However, that does not take away from the intention of the Bill and the serious issue involved. Members of Fine Gael and the Labour Party called on the IPU and the HSE to back away from their entrenched positions, which thankfully they did, to allow time for negotiations to take place and a process to evolve to get around the Competition Authority issue, thereby allowing for many facets of the dispute to be resolved without talking about pricing, which was ultimately to be discussed in a parallel forum that would not be in conflict with the authority. I am deeply concerned that the negotiations are not moving apace and the time that was bought has been frittered away.

IPU representatives have been in court since this issue was last discussed in the House and the union's offices were raided by the authority. Such behaviour during an industrial relations dispute does nothing to build trust and it only serves to intimidate and anger people. This is no way to run a civilised democracy. The perception of intimidation is unacceptable and this is not the first time it has occurred. No more action of this nature should be taken and the authority should stand back until the negotiations are completed and a resolution found. If issues still remain for the authority at that stage it can act then, but it is counterproductive to act in this way at this time. Irish people reject being subjected to such treatment and all it does is cause revolt. This treatment pushed the pharmacists over the line and they withdrew their services for the methadone scheme. They were on the verge of returning until certain people were raided by the Competition Authority and they blew a fuse.

I will not approve of action that leads to the diminution of service or places patients in danger by the IPU or the HSE, which is very culpable. The executive is using the Competition Authority to refuse to engage with the IPU and it is not displaying goodwill to find a way around this. Where there is a will, there is a way but if there is no will, there will not be a way and this is clearly what is happening. I hope that this problem can be resolved through a negotiated parallel structure, which has been mooted. The IPU e-mailed all Members earlier stating:

The Union has proposed that talks on a new pharmacy contract, under an Independent Chairperson, should commence immediately. The purpose of these talks would be to reach agreement on all aspects of the contract, including an appropriate pricing structure for the delivery of pharmacy services. This had previously been agreed with the HSE at a meeting in November. When agreement is reached on an appropriate pricing structure, the matter could then be referred to the new proposed arbitration system, which the Minister for Health and Children alluded to in the Dail on 21st November 2007. It is hoped that such a Body or System will provide an independent and fair assessment of all the issues involved and could then make recommendations to the HSE on pharmacists' remuneration.

We are faced with a serious problem and the elderly and the chronically ill will be worried about continuity of their medication after Christmas. That is unacceptable and I appeal to the HSE to engage properly in this process to find a way around this problem. I am sure the executive can if it displays goodwill. Mr. Shipsey is still involved and there is no reason the process should not succeed.

Some years ago it was prescribed that Ireland should rationalise its union structure from a large number of small unions to a small number of large unions to mirror the practice in Germany, which at the time had a good industrial relations record, was a leading economy in the EU and had engaged in a social partnership type arrangement. We have come full circle and the Government is recommending that it cannot deal with certain unions such as the Equity actor's union and the Irish Pharmaceutical Union and wants to deal with suppliers of services individually rather than collectively. This is a recipe for disaster and anarchy, which will lead to fragmented industrial and commercial relations between the Government and these sectors. Of what is the Government afraid, given it is in the most powerful position as the central purchaser of services?

It is reasonable to re-examine the potentially chaotic scenario that may evolve if an alternative, workable legal replacement is not provided so that legitimate groups may communicate with State bodies in an efficient non-combative manner. Arbitration could be used in conjunction with the review of the Competition Act under way and the messenger model adopted in the US could also be used, as Deputy Varadkar stated. The Competition Authority is not the arbiter of law. It is a prosecutor and it must go to the courts to prosecute, where it does not always win. Going forward, how do the Minister and the Government propose to deal with members of the extended medical profession such as dentists, physiotherapists, general practitioners and chiropodists when it wants to roll out community services? Will it approach every professional individually?

There is a country in the eastern part of the world in severe distress and if the powers that be could negotiate with one warlord only they might have an opportunity to achieve peace, but it is proving impossible because there are 25 warlords. The same applies when a single body fronts up for a group of bodies. It is much easier to do a deal and make it stick rather than make separate deals through the country, which would be unworkable. That would lead to a diminution of service in rural areas. I ask the Ministers concerned and the Government to address in a proactive manner a solution to the predicament resulting from the enforcement of the Competition Act and EU treaty regulations and arrive at a realistic method of communicating with key service providers without the need for confrontation but rather in mutual co-operation.

Debate adjourned.