Paul Coghlan (Fine Gael)

I thank the Senators for their comments and I will quickly complete my contribution.

The main concern I have about the legislation, which I am aware is shared by many Members on all sides of this and the other House, relates to the absence of a prohibition on predatory pricing as an aspect of anti-competitive conduct in grocery goods trading. My understanding of the basis for the changes the Minister is introducing was succinctly set out in his press statement yesterday when he claimed that the measures contained in section 15B of the legislation to prohibit certain unilateral conduct on the part of non-dominant undertakings in the grocery trade were needed following the revocation of the order as they would not be captured by either section 4, because the conduct does not involve agreements or concerted practices, or section 5, because they were not the conduct of a dominant undertaking.

If that logic applies in regard to the demanding of "hello money", resale price maintenance and unfair contract terms, surely it must also apply to predatory pricing. I suspect the Minister may be concerned that any attempts to outlaw predatory pricing could have an impact on genuine price competition. This is the basis of a response to a parliamentary question he gave to Deputy Cowley on 22 November 2005.

However, careful drafting could clearly distinguish between genuine predatory pricing and normal price competition. It is farcical to think that some of the largest retailers in the world will be able to engage in predatory pricing in Ireland with impunity, in circumstances where their market scale globally is way in excess of the turnover of the grocery market. One statistic I heard recently suggested that Tesco had a turnover eight times the size of the entire grocery market in Ireland. It would be farcical if under Irish law such a retailer was able to engage in predatory pricing against a smaller player without any legal sanction. As matters stand if this legislation is enacted in its current form there will be no legal mechanism available to any retailer who is subjected to sustained predatory pricing by a non-dominant undertaking. That is grossly unjust, punishes enterprise and initiative and leads to less competition. I cannot understand the logic of failing to make provision against predatory pricing in this legislation. Many of the lawyers to whom I have spoken are adamant that the Competition Act does not prevent predatory pricing when it is carried out by a non-dominant undertaking. They have argued that if predatory pricing is carried out by a dominant undertaking, it is extremely difficult to bring a legal prosecution. It is telling that the Competition Authority has not taken any action on predatory pricing since it was given its prosecuting powers in 1996.

I am also concerned about the provisions of the proposed new section 15B(5) of the 2002 Act. Section 15B outlaws "hello money", the demanding of advertising allowances, unfair contract terms and resale price maintenance. Subsection (5) of that section negates the impact of those prohibitions, however, by stating that:

Conduct described in subsections (1) to (4) shall not be prohibited unless it has as its object or effect the prevention, restriction or distortion of competition in trade in any grocery goods in the State or in any part of the State.

This stipulation makes it extremely difficult to envisage how any determination on specific anti-competitive behaviour of the nature outlined in the first four subsections of section 15B could be effectively outlawed. I have been told by lawyers that it takes the Competition Authority an average of two to three years to investigate and conclude cases after complaints are made. If a person makes a complaint to the authority about the demanding of hello money, for example, it will need to determine whether the demanding of such money had the object or effect of preventing, restricting or distorting competition. Given the length of time that it is likely to take the authority to reach this determination on the basis of the open-ended procedures it seems to follow and the lack of clarity in the legislation, the provisions of the proposed new section 15B(5) of the 2002 Act seem to fundamentally undermine and nullify the preceding subsections so that they have little effect. In the fast-moving grocery trade, clarity is required about what is and is not allowed. In his press statement yesterday, the Minister said he believes it is critical to provide certainty to participants in the grocery business about the rules and regulations which govern that trade. I suggest that the inclusion in this Bill of the proposed new section 15B(5) of the 2002 Act does not provide clarity and certainty.

As I said earlier, I am concerned that the Minister has not made a transgression of the proposed new section 15B of the 2002 Act a criminal offence under the Competition Act. It is unacceptable that he seems to have introduced a lighter type of legal sanction in the form of civil proceedings. I have tabled amendments to address some of the concerns I have raised. While Fine Gael accepts any legislation that facilitates the passing of discounts to consumers, it is adamant that measures must be enacted to prevent predatory pricing. The Minister has ignored this aspect of the legislation. He has sought to dilute the other measures he purported to introduce to prevent anti-competitive activity following the revocation of the Restrictive Practices (Groceries) Order. While the consideration of these measures in this House will be limited, given the pace at which the reform is being pushed through, I hope the Minister will give consideration to the amendments I have tabled. This important matter should be addressed with less haste and greater consideration.