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

The Bill, which I bring before the Seanad, is a major piece of reforming legislation which has three primary objectives. The first is to create the competition and consumer protection commission through the merger of the National Consumer Agency and the Competition Authority, thereby forming a powerful body with real teeth acting to protect and vindicate consumers' rights. This constitutes an important part of the programme of reform we are implementing across my Department. To assist the new body combat the issue of serious white-collar crime, new criminal investigation functions are being added to the significant powers that already exist which will, ultimately, improve competitiveness and protect consumers.

The second purpose of the Bill is to introduce strong regulations and enforcement powers to ensure fairness between the various parties in the grocery goods sector. Inequality between these players can potentially exist, leading to potential abuse in a manner that is not in the interests of jobs, consumers or sustainable safe food. Relationships will continue to be based on commerce while prices will continue to be set by hard negotiations because this is in the interests of consumers.

The third purpose of the Bill is the important issue of media mergers and acquisitions. The Bill foresees retention of the basic model of current laws, based on the principle of avoiding intervention by Government in media ownership except in specific circumstances following procedures determined by law. This is in keeping with the recommendations of the advisory group established to examine this area. Diversity of content and diversity of ownership across the media remains an important part of a healthy democratic society. However, it is important to modernise these laws to reflect international best practice and in line with the latest technological developments and that is why we are implementing in full the recommendations of that advisory group, with some enhancements and making important changes to update laws in this area.

I will now deal with each of these three elements in turn, the first being the establishment of the competition and consumer protection commission. As the House is aware, reform of the public service is one of the key commitments in the programme for Government and rationalisation of the State agencies is a major part of that commitment. As part of this rationalisation, the Competition Authority and the National Consumer Agency are being merged into a new body, the competition and consumer protection commission, which will result in a new body with stronger powers to deal with competition and consumer issues.

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

The Bill sets out, primarily in sections 8 to 46, inclusive, in Part 2, the structure, powers and functions of the new merged body. Many of these sections cover traditional provisions on the establishment of a new body and the dissolution of the existing bodies. In terms of structure and corporate governance, the new merged body will comprise a chairperson and between two and six members, who will act in a collegiate manner. This structure is modelled on that of the Competition Authority and, consequently, there will be no traditional board. The initial members of the new merged body will be the current members of the Competition Authority and the CEO of the National Consumer Agency. Appointments thereafter can only be made by me, as Minister, following an open recruitment process undertaken by the Public Appointments Service. As is the case with the two existing bodies, the new competition and consumer protection commission will be independent in the carrying out of a range of functions such as enforcement, investigations and merger determinations. The new competition and consumer protection commission will be accountable to the Oireachtas and to me, as Minister for Jobs, Enterprise and Innovation, in line with usual accountability and governance procedures and practices. My Department has worked, and is continuing to work, with both bodies to ensure a smooth transition from the two separate entities to a single dual functioning body responsible for competition and consumer protection since the amalgamation was announced.

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

For this reason, one of the purposes of this Bill is to strengthen the enforcement of competition law in Ireland by adding to the powers that will be available to the new commission. Breach of competition law is a serious white-collar crime and, as with all other forms of crime, those who commit crimes must be punished accordingly. A suite of additional enforcement powers has already been provided to the Competition Authority in 2012 under the Competition (Amendment) Act 2012 and additional staff were also sanctioned to be allocated to it in order to strengthen competition law enforcement. This Bill, in Part 7, gives additional powers to the new commission by extending the provisions of the Criminal Justice Act 2011 to serious competition law offences. In addition, some elements of the Criminal Justice Act 2007 have been incorporated into the powers of the new commission.

Part 7 of the Bill also proposes the extension of the provisions of the Communications (Retention of Data) Act 2011 to serious competition law offences. However, the implications of the recent European Court of Justice ruling on the relevant EU directive on data retention and Ireland's Communications (Retention of Data) Act 2011 in general are currently being examined.

Other substantive changes to the Competition Act 2002, in sections 47 to 73, inclusive, in Part 3, mainly revolve around the procedures to be operated by the new competition and consumer protection commission on merger notifications. Many of these emanated from a public consultation process held in 2007-2008.

On the setting of new thresholds for merger notifications, the setting of appropriate thresholds is crucial for ensuring that mergers that raise substantial lessening of competition concerns are captured by the compulsory notification system. At the same time, it is necessary to be mindful that these thresholds must strike a balance between the need for the competition and consumer protection commission to review transactions having a nexus to the State while not placing unnecessary burdens on business with respect to lodging notifications. The overall aim of these changes is not to seek an increase or a decrease in the number of notifications received by the new competition and consumer protection commission but to ensure that the notifications received have a real nexus to the State.

In tandem with the changes I have outlined, changes are being included to redefine the number of working days within which the new competition and consumer protection commission has to make a decision on notifications. Dependent on the operations of the new thresholds, a review of these new deadlines will be undertaken to ascertain if they are appropriate in the context of the new regime.

On the Consumer Protection Act 2007, a small series of five amendments is being proposed in sections 75 to 82, inclusive, of Part 5, on the basis of experience of this Act since 2007. It is also intended to bring forward a further consumer rights Bill in 2015, which will update sales law and build on the experience of the Consumer Protection Act 2007.

I will now address another important element of the Bill, namely, the provisions in Part 6 that regulate for certain practices in the grocery goods sector. This element has engendered a significant amount of debate and discussion inside and outside the Oireachtas. The grocery goods sector and all its constituent parts are important for the national economy, especially in terms of employment. The Government is strongly of the view that it is important to ensure a balance in the relationship between the various players in the grocery goods sector and that Ireland continues to have robust agrifood and retail sectors. Regulation of certain practices in the grocery goods sector is intended to achieve such a balance, taking into account the interests of all stakeholders in the grocery goods sector, including the interests of the consumer, and the need to ensure there is no impediment to the passing on of lower prices to consumers. This balance is an important issue.

As Senators are aware, the Oireachtas has examined this issue on a number of occasions. The Joint Committee on Agriculture, Food and the Marine, under the chairmanship of Deputy Andrew Doyle, published a detailed report in late 2013 on the grocery goods sector and highlighted a range of areas it believed were affecting the grocery goods sector. I also recall that the Minister of State, Deputy Sean Sherlock, had a worthwhile debate on the report in the Seanad in November 2013. The Joint Committee on Jobs, Enterprise and Innovation, under the chairmanship of Deputy Willie Penrose, also produced a detailed report on the retail sector in early 2011.

As Senators will be aware, in 2010 and 2011, unsuccessful attempts were made, under the guidance of Mr. John Travers, to secure a voluntary code of practice. At European Union level, a voluntary initiative on principles of good practices in the food supply chain was launched in September 2013 and adopted by certain European associations. However, not all elements of the supply chain signed up to this initiative, mirroring the divergent views on the value of a voluntary system that emerged in Ireland from the Travers report process.

In a parallel exercise, the European Commission published its Green Paper on unfair trading practices in the business to business food and non-food supply chain in Europe in early 2013 and commenced a public consultation on the paper to gather the views of market participants on the occurrence of these practices, their possible effects and the most effective remedies, if required. The Commission has considered the results to decide whether it will initiate any proposals in this area and it is understood a communication will soon issue from the Commission on the topic.

None of this precludes any member state from taking measures it believes may be required and such complementarity between European Union and national work has been recognised by the Commission. While we will take an interest in the implementation of the voluntary initiative and the impact of its development, it will not halt implementation of the commitment in the programme for Government to regulate in this area. To give effect to this commitment, the Government will introduce statutory regulation of certain practices. These will take the form of a series of regulations, with associated sanctions, rather than a code of conduct. This is a more powerful tool than a code.

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

The introduction of any regulations does not and cannot guarantee anything in relation to the prices received by any given link in the supply chain. Negotiations on price will remain an issue between the contracting parties, as is the case in any commercial relationship. What the new regulations will be intended to achieve is to regulate certain practices rather than set prices. These provisions are enabling provisions and Part 6, which covers sections 83 to 85, inclusive, and section 86, sets out a long list of issues and activities which may be covered by such regulations when promulgated through a statutory instrument. I intend that this implementing statutory instrument be brought into force as soon as practicable after the Bill has been enacted. I will consult widely on the drafting of these regulations, including with stakeholders in the grocery goods sector and the Minister for Agriculture, Food and the Marine. I have also made a commitment to bring the draft regulations to the Oireachtas in advance as part of this consultative process.

Preparatory work on the regulations is taking place parallel to the Oireachtas consideration of the Bill. The statutory instrument will be accompanied by a detailed regulatory impact analysis. The use of a statutory instrument allows for a more rapid response to changing conditions in future, rather than amendments to primary legislation.

The measures being proposed are only intended to address the issue of fair trading between various parties in the grocery goods chain. Existing competition law will remain in force to counter price fixing, abuse of dominant positions, etc. The Bill does not and cannot be allowed to circumvent the existing corpus of competition law.

I will discuss media mergers, which are dealt with in section 74 of Part 4. Under the current system, if the Competition Authority determines that a media merger fails the competition test, the matter is closed and the issue is not referred to the Minister for Jobs, Enterprise and Innovation for a determination in the public interest. If the authority determines that the merger can be put into effect, the Minister may direct the authority to carry out a full investigation based on the notification and analysis from the Competition Authority of its decision and the details of the merger, as presented. As part of this process, the authority is required to give an opinion as to how the application of the relevant public interest criteria, for example, the strength and competitiveness of media businesses indigenous to the State and the extent to which ownership or control of media businesses and control of particular types of media business in the State are spread among individuals and other undertakings, should affect the exercise of the Minister's powers. If the Minister does not make a decision counter to the original Competition Authority determination, no further action is required. However, if the Minister makes a decision counter to the original Competition Authority determinations, this decision must be confirmed through the making of an order, which must be laid before the Houses of the Oireachtas.

Part 4 will fully implement the recommendations from the advisory group on media mergers, which published a report, known as the Sreenan report, during the lifetime of the previous Government. These recommendations are aimed at modernising the system for regulating media mergers to reflect international best practice and in line with the latest technological developments. However, the broad three-step process currently in place for media mergers will continue to operate. First, a determination will be made by the competition and consumer protection commission that a merger has taken place. Second, a decision will be taken by the competition and consumer protection commission on whether the merger should be permitted to proceed on competition grounds. Third, in the event that the competition and consumer protection commission allows the merger to proceed on competition grounds, a decision will be taken by the relevant Minister on whether the merger should be permitted to proceed on the grounds of the public interest aspect. There is no provision for, nor did the Sreenan report recommend, an ongoing regulatory function in respect of media ownership.

The power only falls to be exercised in the event that a media merger takes place as defined and that merger is permitted to proceed on competition grounds. The key concept relating to the definition of a merger remains the concept of "effective control" and no changes are recommended or provided for in this respect.

Section 74 or this Bill includes a comprehensive suite of proposals to implement in full the recommendations of the Sreenan report with two enhancements. The first sees a change in the relevant Minister for such public interest considerations from the Minister for Jobs, Enterprise and Innovation to the Minister for Communications, Energy and Natural Resources, with a major role for the Broadcasting Authority of Ireland in drawing up a report for the Minister prior to the latter making a decision in the matter from a public interest aspect. The Sreenan report noted that both Ministers could be the relevant Minister for the purposes of this test but it came down on the side of the Minister for Jobs, Enterprise and Innovation as the Competition Authority, an agency reporting to that Minister, would be responsible for the competition test of the proposed merger. However, given progress in the areas of media, broadcasting and the digital sector, it is more appropriate that the responsibility be transferred to the Minister for Communications, Energy and Natural Resources.

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

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

This effective mechanism for overseeing competition and consumer empowerment in the market, which is one of the main aims of the Competition and Consumer Protection Bill 2014, is the best way to ensure there are no barriers to entry and that jobs growth and innovation are promoted. This will promote competition and consumer standards, long-term competitiveness and jobs growth. I look forward to debating with Senators now and on Committee and Report Stages, which will follow.