Wednesday, 8 February 2012
Competition (Amendment) Bill 2011: Report Stage
I move amendment No. 1:
In page 5, lines 7 to 17, to delete all words from and including “may,” in line 7 down to and including “specified.”,” in line 17 and substitute the following:
(a) order one or all of the following—
(i) that the undertaking shall discontinue the abuse, or
(ii) that the undertaking shall adopt such measures for the purpose of securing an adjustment of that dominant position,
as may be specified in the order (including measures consisting of the sale of assets of the undertaking) within such period as may be so specified, or
(b) in civil proceedings, impose a liability on that undertaking for a fine not exceeding a class A fine.”,”.
Deputy O’Dea has had a family bereavement and I am representing him. This amendment was also dealt with on Committee Stage. We in Fianna Fáil were not happy with the response offered by the Minister at the time and we are moving it again.
The difficulty in dividing competition law offences into hardcore and non-hardcore offences is that those who are abusing competition law are so well resourced that they know their way around it. The profits and gains made by abusing non-hardcore offences in particular are not treated with any serious fines in this legislation. That is not a political opinion or the opinion of Fianna Fáil. That is the view of the Competition Authority. If we are serious about this Bill, one would assume that the views of the Competition Authority - those we entrust with enforcing this legislation - would be taken on board. The head of the authority has produced a lot of information on this. As recently as last September, the Competition Authority published a detailed document on the issue. Noreen Mackey has published quite a lot of work on this.
The use of the res judicata defence does not add up when we go through the Constitution and the practicalities of the way competition law is being abused. From my time on the enterprise committee and from my time in the Minister of State’s Department, I know the difficulties in dealing with competition. Competition is supposed to level a playing field, but the way in which business practice has evolved in many sectors has ensured that competition has made that playing field a lot more uneven than was ever envisaged. The purpose of this amendment is to level that playing field again and put a serious impediment in the way of those who abuse competition law and engage in anti-competitive practices, regardless of whether these are defined as hardcore or non-hardcore offences.
What we are trying to do is a good idea, but no matter how well we build this vehicle, there is not much point to it without the resources. For instance, car manufacturers build fantastic cars and much effort is put into getting everything right but if one has no money for fuel there is not much point in having a decent car. Is the Minister of State aware of the litany of problems experienced by the Competition Authority with regard to funding? No matter what we do here today, unless the authority is funded adequately, there is not much point.
I refer to a statement in 2000 by the director of competition enforcement, Mr. Patrick Massey. He resigned from his position and he stated his conviction that it was no longer possible for him to continue as director of competition enforcement due to the failure to provide adequate resources to enable him to do the job properly. In April 2001, an OECD report on regulation in Ireland declared that strengths in competition laws and institutions had been compromised by a lack of resources, unclear independence and inconsistent leadership. In 2004, Dr. John Fingleton, head of the Competition Authority, informed the Committee of Public Accounts that anti-competitive practices were costing the Irish economy approximately €4 billion annually - which we are now paying back - yet successive governments have starved the Competition Authority of funds and staff necessary for it to carry out its statutory duty. On 7 October 2010, the Competition Authority chairman, Mr. Declan Purcell, said that the authority’s ability to carry out its statutory and other functions is seriously and regrettably compromised. He also said that he believed some facts need to be recognised and acknowledged.
With the current level of resources and which it can expect to continue to have - although I hope the Minister of State will change this situation - this is his assessment of what it is realistic to expect of the Competition Authority. He said that the authority is no longer in a position to investigate and assist the Director of Public Prosecutions in the prosecution of criminal cartels to the extent it has done in the past and that the authority would be doing well if it can conclude one major investigation in the non-criminal enforcement end of business per year. As regards merger reviews, he stated that this is an area where the authority has no choice but to respond within statutory deadlines but that it will do so probably by redeploying staff from enforcement work. As regards competition advocacy, he said the authority was not now in a position to carry out market studies and will have to focus its resources on other less intensive forms of advocacy. He also stated that the Competition Authority will probably have to suspend a number of enforcement investigations.
We get this perfect here, no more than the Germans get the Volkswagen perfect and they put plenty of effort into it. However, if one has no petrol to put into the car, what use is it, even if the car is perfect. A sevenfold increase in resources is required to be given to the Competition Authority. Currently there are two gardaí working with the authority and this number is grossly inadequate considering that in one year it is estimated to have cost €4 billion. This could be likened to having only two gardaí patrolling the streets of Dublin, considering the epidemic in white-collar crime.
Competition is a critical and central issue as regards the ability of the State to grow business in the future. Unfortunately, the Government and the troika have always focused on wages when seeking to develop competitive advantage. The State is replete with issues of competitiveness that could be resolved, for instance, the situation of upward-only rents which is putting small businesses out of business on a weekly basis. Grafton Street has the second highest rents in Europe and the fifth highest in the world. This issue is in the gift of the Government to resolve and the resolution of which would make business far more competitive.
I refer to the large number of anti-competitive practices at work, for example, in the concrete industry. Such practices are outside the oversight of the State and they go unpunished. As Deputy Flanagan described very well in his contribution, these practices cost the State a massive amount of money.
This legislation is shockingly weak. The Competition Authority does not have nearly enough resources to do its job properly. A body is being created but the resources have not been provided for it to carry out its functions. It is next to impossible for private individuals to take enforcement cases and I know of such cases which have dragged on for 16 years in the courts, against large, well-resourced organisations. The European Union states that private enforcement needs to be possible and achievable for small Irish businesses to enable them achieve some level of fairness.
Sinn Féin also suggested that a provision for whistleblowing should be included in the process. In Britain, individuals within businesses are incentivised by means of large sums of money to blow the whistle on uncompetitive practices. This is an opportunity missed in this legislation. Lack of competitiveness radically undermines the economy by creating massive costs and results in the loss of thousands of jobs. The State is paying over the odds for products as a result of a lack of competitiveness. Ireland is much less competitive than other states.
Sinn Féin suggested a provision in the Bill for civil fines. As I and another Deputy said, it is a case of BG and AG, a case of Fine Gael before being in Government and Fine Gael after coming into Government. Before being in Government, everyone in Fine Gael and in the Labour Party spoke about getting rid of upward-only rents but as soon as they came into Government this has been thrown off the agenda. There has been a change in heart with regard to civil fines. Sinn Féin strongly encourages the Government to support the amendment to allow for civil proceedings and civil fines so that individual businesses can achieve some level of competition within their markets.
I sympathise with Deputy Willie O’Dea on the death of his mother.
I refer to his amendments Nos. 1 and 2, and provisions relating to a court order regarding the abuse of a dominant position. The Bill provides that the court may require the undertaking to discount the abuse or to adopt measures to stop it being in a dominant position or to secure an adjustment of that position. Such measures can include the sale of the undertaking’s assets. Deputy O’Dea proposes that the court may order that the undertaking shall discontinue the abuse and-or the undertaking shall adopt such measures for the purpose of securing an adjustment of that dominant position. The sale of the undertaking’s assets is also provided for. In effect, it appears the main difference between our provision is that the Bill permits the court to order the adoption of measures to ensure the cessation of a dominant position whereas this option is omitted from Deputy O’Dea’s amendment. Deputy O’ Dea seeks to introduce in civil proceedings a fine not exceeding a class A fine, that is, a fine not exceeding €5,000. A class A fine is a fine imposed in criminal proceedings and Deputy O’Dea’s amendment seeks to apply a criminal sanction to civil proceedings. The concept of civil fines, that is, a fine imposed in civil proceedings, is not provided for in Irish law in any sector and providing for such a fine would pose legal difficulties having regard to Article 38.1 of the Constitution which provides that no person shall be tried on any criminal charge save in due course of law. The Attorney General has advised that introducing legislation to decriminalise section 4(1)(d) and section 5 of the Competition Act 2002, otherwise known as non-hardcore offences, to introduce civil fines in order to lower the burden of proof from beyond all reasonable doubt to the balance of probability, would pose constitutional difficulties, having regard to the protection afforded by Article 38.1 of the Constitution.
As the Minister, Deputy Bruton, previously informed the Deputies on Second and Committee Stages, civil fines cannot be introduced.
The proposed Bill will strengthen the power of the Competition Authority and will facilitate private actions. The Minister for Public Expenditure and Reform is preparing a horizontal measure on whistleblowing. A review of the Competition Authority is taking place as part of the examination of the public sector and resources, which are being very much examined at the moment in the context of the finances currently in place, public sector numbers and the austerity affecting all Departments.
Deputy Tóibín referred to alleged anti-competitive practices. The Competition Authority, as the statutorily independent body responsible for enforcing competition law, has received information relating to alleged anti-competitive behaviour in the concrete industry. It is clear that the Competition Act 2002 provides that the authority is independent in the performance of its functions and it is responsible for investigating breaches of the Act. As investigation and enforcement matters generally are part of the day-to-day operational work of the authority neither I nor the Minister, Deputy Bruton, have a direct function in the matter. It would be inappropriate for me to comment on any investigation by the authority.
On the issue of resources it is very much a case of achieving value for money. Having been Chair of the Committee of Public Accounts I am aware that funding has been analysed in every Department. Current resources are allocated very accurately from the point of view of getting value for money. Equally, the authority is working closely within the current terms set out for it.
I thank the Minister of State for his response but it encapsulates the entire difficulty with the Bill and the approach being taken. For as long as we treat breaches of competition law in a different way to a purely criminal offence and take a slightly benign attitude to breaches of competition law we will just sail along. Deputies Tóibín and Flanagan have outlined the consequences. We can talk about breaches of competition law. The Minister of State is well aware that the Competition Authority is not properly resourced to deal with the kind of operators who are breaching competition law. We see it in the concrete and retail sectors among other areas. It will remain a problem as long as we have a benign, happy attitude that it is not a criminal matter, it is a civil matter. It is a criminal offence if one uses one’s dominant power as a business to put another company out of business. It may not be an offence but it is a criminal act to use one’s commercial dominance to affect the choices available to consumers and the State in whatever field one is in. The difficulty with the Bill is that it is a sticking plaster, a Band-Aid. We were promised a far more comprehensive Bill and we are still waiting for it. I hope that if such a Bill comes before us it will be accompanied by a change in attitude from the Department.
The Bill is about fair competition and setting the tone for the Competition Authority, which is an independent body that oversees the marketplace and ensures there is fair competition. Equally, of its nature business is competitive, but it is the role of the Competition Authority to identify the dominance of one business resulting in the closure of another.
It is important to state that the Attorney General has advised that civil fines are not provided for in Irish law. Providing for them would pose legal difficulties having regard to Article 38.1 of the Constitution, even at the level of a class A fine. In that context any legislation to introduce civil fines that would lower the burden of proof from beyond reasonable doubt to the balance of probability would pose constitutional difficulties having regard to the protection afforded in Article 38.1 of the Constitution.
The first part of Deputy O’Dea’s proposed amendment would give the court less power than that proposed by the Government in section 3 by not including the power to undertakings to adopt measures to cease to be in a dominant position and is therefore not acceptable.
I understand the Minister said it is not in the Government’s interests to oversee the work of the Competition Authority. It would be in its interests to ensure that no State agency is paying twice the amount for concrete in this State than is the case in other states. If the budget expenditure is being wasted on artificially high prices for concrete, for example, surely it is in the Government’s direct interest to resolve that issue and not to just outsource it to another body? There are constitutional precedents for the imposition of civil fines. We see that in the tax code where civil fines are imposed on individuals without it being a criminal matter. Given that prior to the election Fine Gael wanted to bring competition law up to international norms, why is the Government now seeking to have it below that level? Why was the policy on civil fines in the party’s election manifesto not included in the programme for Government?
That is the advice we have received. The Competition Authority has indicated that it would like to include such a measure in its overall approach to Government but that is the advice we have received. Deputy Calleary, as a former Minister of State, is aware that one must take the advice of the Attorney General.
I assure the Deputy that the Competition Act 2002 provides that the authority is independent in the performance of its function. Under the Act it is responsible for investigating breaches of the Act. Investigation and enforcement matters are part of the authority’s day-to-day business. Neither I nor the Minister, Deputy Bruton, has a direct function in the matter. It would be inappropriate for me to comment on it.
I too am disappointed and concerned about the amendments and the tenor of the Bill. We can go back to the manifesto. The Minister of State is a business man. He understands the issue better than I or most Members. I appreciate that the Government intends to amalgamate the Competition Authority, the National Consumer Agency, the Broadcasting Authority of Ireland, the Commission for Communications Regulation, ComReg, and the Commission for Energy Regulation, CER, into a single more powerful competition, consumer and utilities commission. Will that happen? The Bill does not give any indication of an effort in that direction. Is that another broken promise and U-turn?
I am delighted that the Minister of State is a self-professed small business man and that he understands the area. We all know what is going on. Many of the key questions have not been answered. It is a smokescreen to talk about longer prison sentences. I do not know of anyone who has served a short prison sentence, even under the previous legislation. I would be delighted if the civil process was used. Community service would be more appropriate where this law was broken. Restorative justice schemes operate in different areas, for example, in my county of Tipperary. It is a meaningful approach. Most of the businesses in question set up with the best of intentions and credentials but, for whatever reason, they stray into anti-competitive practices and infringe the law. There is no point in going through the court process and giving people one, two or now ten years when they will not serve it. There is no better way to encourage people not to infringe the law than to provide restorative justice in their own patches. People would appreciate it better.
The Competition Authority is a joke. I mean no disrespect to the people in it. I do not know how many people have resigned from it. I do not blame the Minister of State for this, as the last Government was involved too. The authority is without money and, thereby, toothless. It has no power. The cartels are as big as ever. Tesco and other big conglomerates came to Ireland and drove our small businesses out in the name of better value, but it is not better value, as they export all of their money and jobs.
We are supposedly developing a new method of funding local government. In theory, this money is to be spent on council materials. It will never get there, as it will probably end up with the bondholders. What will this legislation do to address the fact that Irish councils must pay twice as much for concrete from an Irish company than the amount for which the same company sells it to Britain?
Longer prison sentences are being proposed. One could introduce the death penalty, but it would be irrelevant if one did not enforce the law. If one does not resource enforcement, it will have no impact regardless of the penalties.
When people bought a house, they were hit by the cartels. The situation has destroyed the country. What will this legislation do to prevent it from recurring? The Minister of State mentioned that this matter does not relate to concrete, but it is a good example. After the Bill passes, will we be able to buy concrete for the same price as one can buy it in Britain or are we wasting our time?
The tax code is not the same as competition law. Irish criminal offences are as stringent as laws in the EU. On the whole issue of the competition law, as Deputy Mattie McGrath said, the merger of the National Consumer Agency, NCA, and the Competition Authority, will be included in legislation for which will be brought forward this year. Even the Competition Authority accepts that civil fines are not feasible at the moment.
It is important to put what the Government has done on the record. I chair the high-level group on business regulation. It is about cutting down the regulatory burden on companies It is about helping the 200,000 companies that employ 650,000 people to retain their staff. They are the backbone of the economy. It is about competition. The authority is a statutorily independent body.
Equally important as access to credit is cutting down on red tape. This is the job of government in many ways. While this legislation will give the authority an enhanced role, we all know the legacy with which we have been left. In terms of additional funding, what one has not got, one cannot give. The country is in significant difficulties. We are in receivership and do not have the same level of discretion enjoyed for 14 years by the previous Administration. It could decide what to do with the money. We need to collect €1.2 billion per month to cover what we are spending. This is difficult for competition.
We are doing something. The Competition Authority has spoken with local authorities about the procurement contracts worth €15 billion in total and opening up the market to small companies to compete for contracts worth less than €25,000. Local authorities are in discussions with small companies.
It is a question of survival. Despite all of the pessimism, it is not all doom and gloom among the small companies that I visit as Minister of State. It is important to note that many companies trade successfully. Small companies are the backbone of the economy, although there are dominant players.
The scale of our economy is small. In the context of the 500 million people in Europe, the Single Market presents Irish businesses with opportunities in the UK, Northern Ireland and elsewhere in Europe.
We have gone around the houses, from Volkswagens to concrete. The amendment goes to the heart of the legislation. As long as people get away with small fines yet have the ability to make large profits, their abuse of competition and competition law will continue. We will pay more for concrete, Volkswagens and everything. The Minister of State knows this.
Resourcing the Competition Authority is also an issue. If there are constitutional difficulties, let us change the Constitution. Governments have changed it for much less reason. We need to attack on the culture of competition abuse. The Bill does not go nearly half way towards doing that.
There is significant competition in every trade from Ballina to Dublin. The Deputy knows this only too well. For example, there is astronomical below cost selling and dumping of stock. People buying in the marketplace might not assume there is competition, but-----
I move amendment No. 2:
In page 6, lines 10 to 18, to delete all words from and including “may,” in line 10 down to and including “specified.” in line 18 and substitute the following:
(a) order one or all of the following--
(i) that the undertaking shall discontinue the abuse, or
(ii) that the undertaking shall adopt such measures for the purpose of securing an adjustment of that dominant position,
as may be specified in the order (including measures consisting of the sale of assets of the undertaking) within such period as may be so specified, or
(b) in civil proceedings, impose a liability on that undertaking for a fine not exceeding a class A fine.”.
I move amendment No. 3:
In page 6, between lines 30 and 31, to insert the following:
5.--The Principal Act is amended by the insertion of the following section:
“14B.--(1) This section applies to an agreement entered into by the competent authority with an undertaking--
(a) following an investigation referred to in paragraph (b) of subsection (1) of section 30, and
(b) that requires the undertaking to do or refrain from doing such things as are specified in the agreement in consideration of the competent authority agreeing not to bring proceedings under section 14A (inserted by section 4 of the Competition (Amendment) Act 2012) in relation to any matter to which that investigation related or any findings resulting from that investigation.
(2) The High Court may, upon the application of the competent authority, make an order in the terms of an agreement to which this section applies if it is satisfied that--
(a) the undertaking that is a party to that agreement consents to the making of the order,
(b) that undertaking obtained legal advice before so consenting,
(c) the agreement is clear and unambiguous and capable of being complied with,
(d) that undertaking is aware that failure to comply with any order so made would constitute contempt of court, and
(e) the competent authority has complied with subsection (3).
(3) Where the competent authority proposes to make an application for an order under subsection (2) in respect of an agreement to which this section applies, it shall, not later than 14 days before the making of the application--
(a) publish the terms of that agreement on a website maintained by the competent authority, and
(b) publish a notice, in not fewer than 2 daily newspapers circulating throughout the State--
(i) stating that it intends to make such application,
(ii) specifying the date on which such application will be made, and
(I) that the agreement to which the proposed application relates is published, in accordance with paragraph (a), on a website maintained by it, and
(II) the address of that website.
(4) An order under subsection (2) shall not have effect--
(a) until the expiration of the period of 45 days from the making of the order, or
(b) where an application is made to the High Court under subsection (5) in respect of the order, until the making of a final determination in relation to that application.
(5) The High Court may, upon the application of any person (other than the competent authority or the undertaking to which an order under this section applies) made during the period referred to in paragraph (a) of subsection (4), make an order varying or annulling an order under subsection (2) if it is satisfied that the agreement in respect of which the order was made requires the undertaking to which the order applies to do or refrain from doing anything that would result in a breach of any contract between the undertaking concerned and the applicant or that would render a term of that contract not capable of being performed.
(6) The High Court shall not make an order under subsection (5) if it is satisfied that the contract or term of the contract to which the application for such order relates contravenes section 4 or 5, or Article 101 or 102 of the Treaty on the Functioning of the European Union.
(7) The High Court may, upon the application of the competent authority or an undertaking to which an order under subsection (2) applies, make an order varying or annulling the first-mentioned order if--
(a) the party (other than the applicant for the order) to the agreement to which the first-mentioned order applies consents to the application,
(b) the first-mentioned order contains a material error,
(c) there has been a material change in circumstances since the making of the first-mentioned order that warrants the court varying or annulling the order, or
(d) the court is satisfied that, in the interests of justice, the first-mentioned order should be varied or annulled.
(8) Subject to any order under subsection (9), an order under subsection (2) shall cease to have effect upon the expiration of 7 years from the making of the second-mentioned order.
(9) The High Court may, upon the application of the competent authority made not earlier than 3 months before the expiration of an order under subsection (2), make an order extending the period of the first-mentioned order (whether or not previously extended under this subsection) for a further period not exceeding 3 years.
(10) Paragraphs (a), (b), (c) and (d) of subsection (2) shall apply in respect of the determination of an application referred to in subsection (9) as they apply in respect of the determination of an application referred to in subsection (2).
(11) In this section ‘undertaking’ includes an association of undertakings.”.
Since Committee Stage, officials in my Department, the Competition Authority and the Office of the Attorney General have been working on a proposal whereby the High Court can make a court order in respect of an agreement entered into by the authority with an undertaking. I am pleased to move this amendment, which will further strengthen company law. Where the authority carries out an investigation into an alleged breach of the Competition Act, it can enter into commitments or agreements with the undertaking under investigation. This undertaking, without an admission of liability, would agree to cease and desist from certain behaviour or to act in a particular manner. In return for this agreement, the authority agrees not to initiate proceedings under the Competition Act, thus avoiding the significant legal fees and the deployment of resources that a criminal or civil prosecution entails.
Such agreements are enforceable as a matter of contract law. However, should an undertaking renege on its agreement, the authority is required to go to court to enforce compliance. This involves an examination of the alleged anti-competitive behaviour, which can involve complex economic evidence and so on.
The amendment proposes a statutory mechanism that will permit the authority to apply to the High Court for an order to give court backing or support to the agreement. If the undertaking breaches the order, such breach will constitute a contempt of court. In such circumstances, the authority could apply to court to have the undertaking penalised for the breach. Breach of a court order can ultimately be punished as a contempt of court, with remedies such as committal and attachment for persons or the sequestration of assets. Rather than being a hearing on the merits of the competition and economic aspects, a contempt hearing would relate to the breach of the terms of the order.
Subsection (1) of the new section 14B in the principal Act, as inserted by amendment No. 3, provides that this section applies to an agreement between the competent authority and an undertaking arising on foot of an investigation carried out by the authority into an alleged breach of competition law. The agreement involves the undertaking refraining from certain agreed actions and, in return, the authority agreeing not to initiate civil enforcement proceedings under section 14A. The term “competent authority” refers to the Competition Authority and the Commission for Communications Regulation, ComReg, where it is performing its competition enforcement functions in regard to the electronic communications market.
Subsection (2) provides guidance for the High Court in its consideration of an application. The court must be satisfied that the undertaking concerned consents to the making of the order and has obtained legal advice before so consenting, that the agreement itself is clear, unambiguous and capable of being complied with, that the undertaking is aware that failure to comply with the order constitutes a contempt of court, and that the authority has complied with the requirements of subsection (3). Subsection (3) requires the authority, in advance of making an application to the High Court, to publish the terms of the agreement on its website and to publish in at least two daily newspapers a notice to the effect that it intends to make an application, the date on which the application will be made and a direction to the publication of the agreement on its website.
Subsection (4) provides that the High Court order shall have effect until 45 days after the making of the order or, where an application is made to the court within the period by a third party under subsection (5), until the court has made a determination on that application. Subsection (5) provides that the High Court may, on foot of the application, make an order varying or annulling an order made under subsection (2) where it is satisfied that the agreement in respect of which the order was made would result in a breach of contract between the undertaking and the applicant or render a term of that contract incapable of being performed.
Subsection (6) clarifies that where a contract or term of a contract between the undertaking and a third party contravenes section 4 or 5 or Article 101 or 102 of the Treaty on the Functioning of the European Union, the High Court will not make an order varying or annulling the original order. A third party cannot enforce a contract or terms of a contract where to do so would cause a breach of competition law.
Subsection (7) sets out the circumstances under which the High Court may, on foot of an application from the competent authority or the undertaking, vary or annul an order made under subsection (2). The court may do so where the other party to the agreement consents to the application, the original order contains a material error, there has been a material change in circumstances since the original order was made that warrants the court varying or annulling that order, or the court is satisfied that in the interests of justice, the original order should be varied or annulled. These are the standard provisions relating to court orders.
Subsection (8) provides for a seven year sunset clause for an order made under subsection (2). Subsection (9) provides for the extension of the order made under subsection (2) and allows the competent authority to apply to the High Court for such an extension not earlier than three months before the order is due to expire. The original order may be extended for a period of up to three years. More than one extension can be applied for. Given changing market circumstances, if an order becomes redundant with the passage of time, a sunset clause is considered appropriate to remove out-of-date orders from the list of court orders. However, it is also necessary to provide for the extension of an order where it remains relevant.
Subsection (10) applies paragraphs (a) to (d) of subsection (2) to the application under subsection (9) for an extension to the period of the original order. These paragraphs set out the conditions on which the High Court must be satisfied before making an order, namely, that the undertaking concerned consents to the making of the order, that the undertaking obtained legal advice before so consenting, that the agreement is clear, unambiguous and capable of being complied with, and that the undertaking is aware that failure to comply with the order constitutes contempt of court.
Subsection (11) provides that the term “undertaking” includes an association of undertakings.
The Minister of State referred to removing out-of-date orders. This is new legislation, but it is already out of date. There was a casual reference to the “sequestration of assets” in the Minister of State’s explanation of this proposal. Until we get to a stage where the seizure of assets and the imposition of substantial fines happen as a matter of course, there will continue to be consistent abuses of competition law. How many investigations are being undertaken by the Competition Authority and how many were completed during 2011?
I do not have that information to hand, but I will forward it to the Deputy if it is available. Amendment No. 3 allows for an agreement between a company, the Competition Authority and undertakings under investigation to be made subject to a High Court order. This will act as a significant deterrent to potential offenders or persons engaged in anti-competitive behaviour. Breaches of the High Court order will constitute contempt of court and result in much quicker and more punitive legal consequences for offenders. This new power for the Competition Authority will send a clear message that anti-competitive behaviour which amounts to white collar crime will be severely dealt with.
While I appreciate the intent of the Bill, it is, as my colleague, Deputy Dara Calleary, pointed out, already out of date. I am not blaming the Minister of State for this, but some blame should certainly be laid at the door of his departmental officials who have a duty to keep themselves abreast of these matters and ensure legislative proposals are up to date no matter what Government is in place. As the permanent government, they have a duty, as much as the Minister of the day, to bring forward this matter.
There is some nice cosy language in the Bill about the seizing of assets which in the old days was done by the sheriffs and the landlords. I hate to be repetitive, but, as I said before, the Bill makes no provision for civil fines or pecuniary penalties. There was a real opportunity to make important changes under section 14A, but it was missed because of a lack of joined-up thinking between the Department of Jobs, Enterprise and Innovation and the Department of Justice and Equality which might have facilitated an extension of the restorative justice programme. The courts are full. Moreover, there is no better way to hurt the people involved than through their pockets and ego - the pride they have in themselves and their good name. Sentencing them to community service would save taxpayers the cost of their imprisonment. They should be put to work on community projects such as clean-up of towns, villages and so on.
Yes. It is being suggested that they could assist the Minister, Deputy Hogan, in the provision of remedial services as provided for in the water services legislation. They could perhaps be asked to dig up back gardens without machinery and re-lay them. These people must be made feel some hurt or empathy with the people they are blackguarding. If it is possible, they will find a way to evade the law. There is no point committing them to prison. That is akin to giving them a holiday. Often, they learn more about criminality when in prison and end up different types of criminals when they get out. They should be made take part in restorative justice programmes and community service. Rather than tinkering around with this, we need to do it.
Despite all the Minister of State had to say, nothing can be done without money. I have not heard anything that suggests any more resources will be put into this area.
The Minister of State spoke about being positive and negative. If I get a telephone call from a person telling me my house is burning down, I will not complain to the person for telling me, rather I will thank him or her for doing so and will then put it out. As regards positivity, if done right, this could be the most positive thing that could happen to this country. That we would not have to pay over the odds for materials is positive.
Since being elected to this House, I have had many meetings with people, including on this issue. The meeting on this issue was more positive than were all the other meetings put together. The sum of €4 billion is a great deal of money. There is much we could do with it. I am not confident, despite what is being provided for in this amendment, that this practice will not continue into the future, and all because of minuscule resources relative to €4 billion per annum. Regardless of what the Minister of State says, this is pointless unless resourced.
Amendment No. 3 provides that agreements between the Competition Authority and undertakings under investigation will be subject to High Court order. That is a major step forward. As the Competition Authority is a statutorily independent body, we cannot go into the detail of its investigations. On Deputy McGrath’s point in regard to independence and value for money, this is only one element of competition. Competition is different from competitiveness. The Competition Authority sets the rules for doing business in the economy of Ireland, North and South. This area has become very competitive when compared with the situation in the boom times when people did not check prices. Anyone in business knows that if they want to survive, they have to deal effectively with competition.
This amendment allows for agreements between the Competition Authority and the undertakings under investigation to be made subject to a High Court order, which will act as a significant deterrent to potential offenders. This is not about community service. People who breach the High Court agreement will be guilty of contempt of court, resulting in punitive legal consequences. What is provided for in this amendment enhances the powers of the Competition Authority. The sunset clause will only apply to orders made following enactment of the Bill.
As indicated, a review of Competition Authority resources is under way. We all know the importance of competition. It is about getting value for money and the survival of companies which are the backbone of the economy. We must provide recognition, understanding and support for the 200,000 Irish companies employing up to 700,000 people. This provision sets in place a strong template. On Deputy Flanagan’s point, I believe more can be delivered with less. I chaired the Committee of Public Accounts for two and a half years during which time I heard report after report of abuse of money. It is amazing what can be done with competent management. This Bill will enhance that.
Competition is independent. It is independent of resources, which is the core problem. Until such time as the Government puts resources into the Competition Authority, it will not be able to do its job. It is a nonsense for the Minister of State to say that because we are in receivership we cannot put money into areas like this. A cost benefit analysis of all investments is undertaken. If the cost to the State is X and the benefit is a multiple of X, it would be ludicrous for the Government not to make the investment.
The Government, through its State agencies and local authorities, is spending over the odds in respect of raw materials for construction, etc. A minuscule investment in the Competition Authority would result in a return of multiples of that investment to the State coffers. For the Government to refuse to do so, when the cost benefit analysis is clear, shows the ridiculousness of its approach. The Government is trying to save a penny when the spending of that penny could result in the return of a pound.
A due diligence exercise is under way in the Competition Authority. Issues such as the cost of doing business and how the regulatory burden on companies can be reduced are being examined by a high level group. Reference was made earlier to a particular dominant company, on which I cannot comment. The issue raised in that regard has been the subject of debate for some time. The authority is empowered to act independently and is, by way of insertion of this amendment, being given powers to go to the High Court in respect of breach of agreements.
Following receipt of the report on how money is being spent, the Government will consider if additional resources are required. As the Taoiseach stated on the Order of Business, this is about encouraging companies to create wealth and jobs in the economy and about getting people back to work again. That is the best competition for any business. Many of us come from small towns and villages, the survival of which is important. We have a small market of 4.5 million people. It is important people get value for money and that there is not unfair practice in that market.
The Competition Authority has 39 staff and can, in respect of breaches of an agreement, take such matters to the High Court. This is a good start. Nothing was done in this area by the previous Administration.
I welcome the Minister of State’s clarification in regard to the number of staff in the authority. Deputy Flanagan referred earlier to the number of gardaí in a small village in Roscommon. Thirty nine staff would not be enough personnel to police one small town in this country on a 24 hour basis. That number of staff is totally inadequate and the big boys know that. At least two chairpersons have resigned from the Competition Authority. It does not have the tools of the trade to do its job
This is, from a business point of view, about efficiency and effectiveness and ensuring the right people are doing the job. The authority is being given new powers. Commitment is important. Money does not solve every problem.
Previously projects were judged on the amount of money invested versus outturn. A project in which €10 million was invested was considered massive and a project in which only €500,000 was invested was not worth mentioning.
I will not comment on that case, except to state it is being investigated thoroughly at present. The sad tragedy is that Ireland is paying a huge price for concrete from the boom years. Everyone is paying for it at present. When one considers the amount of concrete used in construction during that period, we are paying a heavy-----
Members are discussing competition. Clearly, the price of concrete is highly competitive at present. Any builders currently engaged in construction know exactly what they are paying for their tonnage of concrete. I would be amazed if this was not the case and for those few who are building at present, concrete represents value for money.
Briefly, I do not know the current price of concrete, although I should. However, I can confirm that last week, I paid €300, plus VAT, for 17 tonnes of washed sand. As washed sand makes up half the ingredients of concrete, I can imagine the price of the latter. It is not cheap and people are being fleeced for it.
-----but the previous Administration invested heavily in construction. The Government is investing in people, resources and ideas. Its job is about making viable companies and having been appointed Minister of State with responsibility for small companies, I have seen enterprises nationwide in which extraordinary people are doing extraordinary things.
While available resources are limited, 39 staff have been given enhanced powers that will be ring-fenced by the High Court. This will enhance the Competition Authority immensely which, as I stated, is an independent statutory body. After the due diligence currently under way has been carried out and if the advice given to the Government mirrors Deputy Tóibín’s comments with regard to additional funding for the authority being deemed necessary, I have no doubt but that when the Government reviews finances in the future, it will consider such funding if it warrants value for money and a return on investment.
To be helpful to the Minister of State in view of the shortage of staff, I refer to the organisation called the National Employment Rights Authority, NERA. I have suggested for a long time that it should be called the national business support agency. The staff from that authority should be transferred or seconded to the Competition Authority because in they main they are engaged in persecuting small businesses, instead of doing the job they are meant to do. After the enactment of this Bill, those officers should be given the powers proposed therein. These people are well trained and are used to flashing cards and being tough on employers. I suggest they be put on the other side of the fence.
I move amendment No. 4:
In page 6, between lines 30 and 31, to insert the following:
5.—Section 30(1)(c) of the Principal Act is amended by deleting all words after “to” and substituting the following:
“report and make recommendations to Government, Ministers of the Government and Ministers of State concerning the implications of competition in markets for goods and services and, if the Authority thinks fit to do so, it may request the Department of State to notify the Authority within a specified time of the Department of State’s response to the recommendations.”.
Since I was elected last February, it has become clear there often is a disconnect between agencies such as the Competition Authority and the State. It is very clear with regard to the Office of the Ombudsman in a number of areas that there is not seamless communication between such organisations and the Government. Information often is generated that is not acted upon or even considered by the Government. A lack of communication exists and it was shocking to learn that until recently, some level of communication between the Competition Authority and the Government took place through the media etc.
This is a modest amendment to an important legislative item. It proposes that the Government should give some type of response to, albeit not necessarily act upon, the advice of the Competition Authority. There should be some form of understanding of and communication regarding what is taking place within the Competition Authority. Moreover, the Government should explain why it is or is not carrying out a particular action with regard to anti-competitive practices. I refer to what will happen otherwise. Governments find it very easy to ignore anti-competitive practices. In particular, governments that are in cahoots or in close relationships with large businesses that are the centre of uncompetitive practices are better served if they can ignore the advice of the Competition Authority. I simply ask that this amendment be put in place in order that a communications relationship be formalised between the Competition Authority and the Government.
Policy, legislation and enforcement always should aim to make it easy for people and companies to do the right thing and make it difficult to do the wrong thing. There is ample evidence that the current competition legislation is not working and I acknowledge the introduction of this Bill seeks to try to correct this. From my perspective, it is unjust that any small business or any person should be driven out of business and be obliged to spend up to 16 years in and out of courtrooms in an attempt to ascertain the right of that small company or person to trade in the face of anti-competitive practices by larger monopolies. However, that is happening today as Members speak. Justice delayed is justice denied and the Minister of State is correct to allude to the independence of the Competition Authority, which I fully support. However, the Minister and the Government have both the right and the responsibility to ensure that whatever legislation, mechanisms, policies or enforcement measures exist must be used to ensure that anti-competitive practices are stamped out.
The Minister of State should agree to accept this amendment because as my colleague, Deputy Tóibín, stated, this amendment seeks in a modest way to improve communications between the Government and the Competition Authority. It is not about the Government telling the Competition Authority what to do but pertains to the Government responding to statements and information from the aforementioned authority in a public manner. Unless this modest amendment is accepted, all that will happen is the continuation of the failure to confront anti-competitive practices by the great and the powerful in this land. I again ask the Minister of State to accept Sinn Féin’s amendment and to begin the process of introducing systems that will ensure integrity in the conduct of business on this island.
In response to Deputies Colreavy and Tóibín, I do not intend to accept this amendment because in effect it replaces section 30(1)(c) of the principal Act, which gives the authority a statutory advisory role in respect of proposals for legislation and the implications for competition in markets for goods and services of such proposals. This amendment proposes to replace this statutory advisory function with power granted to the authority to report and make recommendations to the Government and Ministers of the Government concerning the implications of competition in markets. The authority may and on many occasions has reported on how competition is working in different sectors and has made recommendations to improve how competition works in these sectors. The present position is that such recommendations are addressed to relevant Ministers, public bodies or representative bodies, as appropriate. The Minister, Deputy Bruton, is engaged in a process to report on progress made in implementing the Competition Authority’s recommendations. Of the more than 170 recommendations made by the Competition Authority between 2004 and 2010, only 7% remain under active consideration. The vast majority-----
The vast majority of the Competition Authority’s recommendations have been accepted and implemented, while others have been accepted in principle but not yet implemented. Others have been rejected or overtaken by policy developments.
Requiring a Department of State to notify the authority of its response to recommendations made by the Competition Authority would give considerable power to an unelected statutory body. While the authority may be expert in the field of competition, it does not have the full or wider public policy role of Departments of State. That is a point with which Deputy Dara Calleary, a former Minister of State, must agree. Ministers and Departments must consider issues from more than one policy perspective and weigh competing and conflicting policies against each other. A single, focused, albeit expert, body does not typically bring such wider considerations into its deliberations. As I do not intend to undermine the authority’s current role in advising the Government on the competition implications of new legislative measures and do not consider it appropriate to make Ministers and Departments answerable to an unelected statutory body, I am not in a position to accept Deputy Peadar Tóibín’s amendment.
The Minister of State has indicated that 30% of the reports issued by the Competition Authority are under active consideration. I hope that is not a euphemism for their being allowed to gather dust. The Government is standing idly by on many issues relating to the authority. I cannot understand how an amendment which seeks to formalise the response from the Government to reports from the authority could in any way weaken either the relationship or the engagement between these two entities. Best practice throughout Europe dictates that the relationship to which I refer should be quite a bit closer than that outlined in the amendment. For example, the competition authority in Italy has the ability to table legislation for consideration. The authority here is far weaker. The amendment would actually strengthen the formalised relationship between the Government and the authority.
The Legal Services Regulation Bill represents a major response on the part of the Government to 14 recommendations made by the Competition Authority, an agency of the State which is statutorily empowered to advise the Government on issues relating to proposals for legislation and the implications for competition. The amendment would remove that function, which would not be acceptable. Ultimately, the Government is responsible for taking policy decisions and must weigh up competing and often conflicting policies. Competition is only one of the many factors the Government must take into account when reviewing the wider policy issues at stake. The position in Northern Ireland is much the same. As it is not appropriate to make the Government answerable to an unelected statutory body which has a single focused view on given matters, it would not be appropriate to accept the amendment.
My understanding of the amendment is obviously different from that of the Minister of State. We are not looking for the Government to enact the advice provided by the Competition Authority. The amendment merely requests that there be a response to such advice. The idea behind it is to prevent reports from being allowed to gather dust. Under the relevant legislation, there is a facility whereby the Houses can actively consider the reports submitted by, for example, the Ombudsman. As a result, a level of legislative or policy change can be brought about. In general, the response of the Government is grossly disproportionate to the scale of the problem. As stated, this is a relatively minor amendment which seeks to ensure the relationship between the Government and the authority would be stronger in the future.
The Ombudsman can be called before Oireachtas committees to report on particular matters. In addition, the Ombudsman is obliged to appear before the relevant committee to comment on her annual report. It is not the position, therefore, that reports are being left to gather dust. The commitment relates to progressing cases. However, the 39 staff of the Competition Authority are operating in the context of limited resources. I advise the Deputy to arrange for the relevant committee to invite the Ombudsman to come before it in order that he might raise with her the point he has made on reports being left to gather dust. That is not the position. If the Ombudsman does come before the relevant committee, the Deputies opposite could challenge her on the issue they have raised regarding the price of concrete. It is not the case that the Competition Authority and the Ombudsman are unaccountable. They are, in fact, accountable to the Oireachtas through its committees.
The most important reference the Minister of State made was to “limited resources”. It is fine to complain about limited resources when one is in opposition because one cannot do anything to make further resources available. However, the Government can increase the level of resources available. It has been stated the amount of money which could be saved in comparison to the amount invested is phenomenal. It was fine for the Minister of State and his colleagues to refer to limited resources when they were in opposition. However, they can now change the position and provide additional resources. I get a sick feeling in the pit of my stomach when the Minister of State refers to limited resources in a way which implies that the matter has nothing to do with him. The Government must find the resources required. If I had control over my local council, I could find the Government €1 million by tomorrow morning. The Government has control over the country and should find the necessary resources. Let us do away with the idea that we have limited resources. The Government has at its disposal as many resources as it wishes to use.
There is also the question of value for money. Ensuring value for money is an extremely important matter for every Department. The Comptroller and Auditor General has illustrated the extraordinary value for money which can be achieved on foot of the allocations made.
I did not say that. In the business world people use the maxim “no problem, no business”. There is always a certain number of problems in every area. Deputy Peadar Tóibín’s amendment relates to a statutory body and the position is as I have stated.
I move amendment No. 5:
In page 6, to delete lines 33 and 34 and substitute the following:
6.—(1) Section 45 of the Principal Act is amended—
(a) in subsection (7), by the substitution of “35” for “14” in each place that it occurs, and
(b) in paragraph (a) of subsection (13), by the substitution of “section 14A” for “section 14”.
(2) The amendment of subsection (7) of section 45 of the Principal Act effected by paragraph (a) of subsection (1) shall not apply as respects books, documents or records seized or obtained under that section before the commencement of this section.”.
This amendment replaces section 6 of the Bill which amends section 45 of the Competition Act 2002. Subsection (1)(a) is new and extends from 14 to 35 days the time limit within which the Competition Authority is required to provide copies of any books, documents or records seized by it during searches carried out as part of its investigations. When the authority carries out investigations into alleged breaches of the Competition Act, its authorised officers will, on foot of District Court warrants, be entitled to seize and retain books, documents and records, including records held electronically.
Since the introduction of the 2002 Act there have been significant developments in technology and computing. The Competition Authority has found it increasingly difficult to return copies of electronically stored records within the 14 day deadline contained in the Act. The problem is made worse when the authority is obliged to conduct multiple simultaneous searches at different sites. Given the exponential developments in computing and the fact the authority is increasingly being obliged to seize ever larger and more complicated computer systems during its investigations, the significance of this issue is likely to grow in future.
It has led to a number of planned searches to be put on hold while alternatives can be examined. Extending the deadline currently provided for section 45(7) to a period of 35 days is a practical solution and will also strengthen the enforcement of the competition law in Ireland which is committed to the EU-IMF programme of financial support for Ireland. The amendment will allow the authority to conduct searches and seize materials without fear of being in breach of the Act where it could not give copies in the timeframe of the Act. The party from which the materials have been seized will still receive a copy of the seized materials. The proposed section 6(1)(b) is the same as the current section 6 of the Bill, which was agreed on Committee Stage, but substitutes a reference to section 14A from section 14 to reflect the splitting of public and private civil enforcement provisions. Following the enactment of the Bill section 14 of the 2002 Act will provide for private and civil enforcement while section 14A inserted by the Bill will provide for the public civil enforcement of competition law.
Section 2 is new and provides that the change from 14 days to 35 days does not apply to any records seized by the Competition Authority before the section has commenced.
It does apply to electronic documents held outside the jurisdiction. I will come back to the Deputy with regard to cloud computing. Given the significant developments in the area of technology and computing the current 14 day deadline for returning copies of documents required under the Competition Act is increasingly difficult to meet. The proposal to extend it to 35 days will be very practical and certainly will add real benefits to the Competition Authority which will assist in fighting anti-competitive behaviour and reflects the Government’s desire to tackle white-collar crime. This change will not apply retrospectively to any documents from before the Bill. People are storing documentation on cloud and I will come back to the Deputy with regard to this.
I move amendment No. 6:
In page 6, line 38, to delete “section 4 or 5” and substitute “section 4 or 5 of that Act”.
This is a technical drafting amendment to section 7 which is a stand-alone section of the Bill. The amendment correctly cross-references sections 4 and 5 as being sections 4 and 5 of the Competition Act 2002 rather than sections 4 and 5 of this Bill.
I move amendment No. 7:
In page 7, to delete lines 22 to 24 and substitute the following:
“(3) The Competition Acts 2002 to 2010 and this Act (other than section 8) may be cited together as the Competition Acts 2002 to 2012 and shall be construed together as one Act.”.
This is also a technical amendment concerning the collective citation of the various Competition Acts and section 8 is not included in the collective citation.
I thank Deputies who spoke on the Bill for their very useful contribution to the debate. I welcome the broad support from all Deputies for the contents of the Bill. I remind Deputies that the focus of the Bill is to strengthen the enforcement of competition law by providing a more effective deterrent through an improved sanctions regime which is very important for competition. A number of interesting points have been made and I will certainly study them and give them serious consideration in the context of other legislation being prepared. I thank Deputies for their co-operation in advancing the Bill.