Micheál Martin (Cork South Central, Fianna Fail)

I dealt with this at some length on Second Stage yesterday. Following the Competition Act 2002, the law on predatory pricing is much broader and stronger than the words in the text. The Act is designed to be analogous to Articles 81 and 82 of the European Union treaty. European case law supports the analogous provisions to prohibit and punish instances of predatory pricing. I do not want to accept an amendment that dilutes the strength of existing case law. I accept to do so is not Senator Coghlan's wish but my strongest legal advice warns of diluting European case law and the Competition Act 2002.

I accept that decisions on the application and interpretation of the Act will rest with the courts but in applying the Act the Competition Authority and the courts may have regard not only to its interpretation by Irish courts but also by the EU Commission, the Court of First Instance and the European Court of Justice, as well as precedent in other jurisdictions with similar competition law provisions.

What is predatory pricing from the point of view of case law? It is the abuse by a company of a dominant position and involves the sale of a product at a price that is less than cost price. Case law even defines what cost price means in these circumstances. We know that concern arose from yesterday's debate as to the definition and measure of dominance in the context of an offence under the legislation. It was a theme of many submissions during the consultation process leading up to the report on the groceries order.

Predatory pricing by a non-dominant firm is a contradiction in terms. Any attempt to define predatory pricing in the manner set down in this amendment will enshrine that contradiction in legislation and in so doing will seriously undermine the Competition Act 2002. Furthermore, the amendment would remove the concept of predatory pricing from the domain of existing case law and would introduce inconsistencies with European competition rules and in the Act itself.

There was much debate in the House yesterday on the concept of dominance and market share. Senator Coghlan referred to my Department's report yesterday and inferred that no grocery retailer would ever be considered dominant in the Irish market. We consider that represents a misreading of the report. On page 97 the report states that on case studies we have examined it is unlikely a firm would be considered to be dominant in a market if it held less than 35% market share. On that basis no grocery retailer would be considered dominant in the national Irish market. The report goes on to show how dominance can be measured not just nationally but in any part of the State. The report clearly states "even a small retailer might be considered dominant in a small rural town if the structure of the market is such that consumers are unlikely to travel beyond its boundaries to buy groceries".

Dominance can also be held jointly by more than one firm operating in a market — companies do not have to act in concert for such a determination to be arrived at. The concept of dominance is necessarily entirely flexible. There are many legal precedents I will not go into on how to consider an undertaking dominant. The European Court of Justice stated an undertaking must possess a position of economic strength which enables it to prevent effective competition being maintained in the relevant market by affording it the power to act to an appreciable extent independently of its competitors, customers and ultimately of its consumers. One must take into account the degree to which the undertaking has market power and if, when and to what extent it encounters constraints on its ability to behave independently by reference to the market.