Wednesday, 25 April 2012
Competition (Amendment) Bill 2011: Committee 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.",".
As it stands, the Competition Authority has no remedy available to it other than declaratory relief and injustice relief.
There is no provision in the 2002 Act for civil fines and penalties for breach of competition law, the advantage of the civil route being that the burden of proof is lower than that required in criminal law, and the problem of juries in criminal trials trying to get their heads around the complexities and nuances of competition law is removed. The Bill has no provisions for civil fines or pecuniary penalties. Section 14A of the principal Act provides for the same reliefs in the form of other declaratory relief or inductive relief.
Cuirim céad fáilte roimh an Aire Stáit. Is breá an rud go bhfuil Gaeilge ag an duine sa chathaoir sin agus gur féidir linn cúpla focal Gaeilge a úsáid agus muid ag plé na díospóireachta seo. Go ginearálta, tá Sinn Féin i bhfábhar an Bhille seo, mar a bhíomar ar na Céimeanna roimhe seo. An t-aon locht atá againn ar an mBille ná nach dtéann sé sách fada agus nach dtógann sé ar bord na tuairimí atá luaite ag an Údarás Iomaíochta, nó an Competition Authority. Maidir leis na leasuithe atá curtha chun cinn ag mo chomhghleacaí, an Seanadóir White, táimid ar son dtabhairt isteach fíneálacha sibhialta sa reachtaíocht seo.
Sinn Féin supports the introduction of civil fines in the legislation. We do not accept the argument put forward that this would be unconstitutional. The major flaw in the Bill, which critically undermines it, is the lack of provision for civil fines as requested by the Competition Authority. The Minister of State will be aware of that. The Competition Authority sought the provision of civil fines to deal with the abuses of the so-called hard core infringement. Central to that is the abuse of the dominant market share, including the refusal to supply, predatory pricing and exclusivity agreements. We remain concerned that the absence of a provision for civil fines will impact on the ability to deal with those types of abuses. The development and implementation of a civil fines section would be a mechanism to deal with the abuse of a dominant position. It would strengthen the provisions of the Bill and further safeguard the consumer and local business. The role of civil fines is to punish corrupt practices where the burden of proof is too onerous to reach. They are a medium strength weapon that should be utilised. I hope the Minister of State will revisit this suggestion and amend the Bill to provide for civil fines to tackle corrupt practices alongside the more stringent provisions he has outlined.
We have been in discussion with a number of groups on the issue, some of whose members are in the Gallery and whom I welcome. The Competition Authority would state only two of a number of findings it has made over the years have been substantial in dealing in any way with some of the anti-competitive practices in the State. Part of the problem is that we do not have a civil fines regime. The burden of proof is onerous when it comes to a criminal prosecution whereas the burden of proof in a civil case is not as onerous. That must be taken on board because as outlined in this Chamber on a number of occasions and according to reports from the Competition Authority, practices in a number of industries in this State, especially in the cement industry although we have seen it in the fuel industry and elsewhere, are resulting in the squeezing out of smaller businesses. We have seen golden circles in practice, price fixing, predatory pricing and the use of so-called hello money. Smaller players in the marketplace are not getting fair play. Anything this State can do to tackle that must be done.
It is very difficult for those smaller businesses to be competitive when the wider economic situation is taken into consideration. For example, a huge number of shops on the high street in Clifden, County Galway, have closed as a result of competition issues. One could also link it to the current economic situation. For example, when people have less money in their pockets to do their weekly shopping, they are more likely to buy their groceries in the bigger multiple shops, but those large multiples are squeezing out the smaller local grocers. We are all aware of that from the experience in our own constituencies.
The reality is that if people had a little more money in their pockets, they would be more likely to spend more in their local shops and the local traders would be more likely to get fair play if the broader aspects of the economy were dealt with. Smaller businesses are receiving a double whammy of competition from large multinational players, some of which we fear are engaging in these anti-competitive practices, and the criminal sanctions in place not tackling the issue. Civil fines would make it easier for those who are being penalised in the system to take a case and might act as a deterrent to those engaging in these activities. We believe the proposal put forward is modest and we ask the Minister of State to reconsider the situation ar na chostais sibhialta seo nó na píonóis sibhialta seo.
Gabhaim buíochas leis an Seanadóir as ucht na tuairimí a nochtaigh sé. Is mian liom freagra a thabhairt i mBéarla i dtosach don Seanadóir. As Senator White's amendments have been grouped, my responses will cover the proposed amendment in respect of both sections 3 and 4.
The first part of Senator White's amendment, paragraph (a), substitutes provisions relating to the actions that a court may order in regard to an abuse of a dominant position. The text of the amending Bill provides that the court may require the undertaking to discontinue the abuse or to adopt measures for the purpose of it ceasing to be in a dominant position or securing an adjustment of that position. Such measures can include the sale of the undertaking's assets.
Senator White is proposing that the court may order "(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". The sale of the undertaking's assets is also provided for. In effect, it would appear that the main difference between what Senator White is proposing and what is in the legislation 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 not included in Senator White's amendment.
In her proposed paragraph (b), Senator White 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. Senator White's amendment seeks to apply a criminal sanction to civil proceedings.
Mar adúirt an Seanadóir, má tá fíneáil sibhialta le bheith ann, caithfear athrú a dhéanamh sa Bhunreacht. Ní féidir fíneáil sibhialta a leagaint amach muna ndeireann Oifig an Ard-Aighne gur féidir sin a dhéanamh go dleathach. Cé gur luaigh gach éinne sa díospóireacht sa Seanad agus sa Dáil gur cóir go mbeadh fíneáil sibhialta ann, ní féidir sin a dhéanamh gan an Bunreacht a athrú.
Notwithstanding the debate both in the Seanad and in the Dáil on civil fines and the views expressed by many bodies, including the Competition Authority and the troika initially, the legal position and the advice the Government has on the provision for such fines is that there would be 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. As the Minister, Deputy Bruton, advised on Second Stage, civil fines cannot be introduced from a legal perspective. That is the advice of the Attorney General.
I am aware the Competition Authority has called for the introduction of civil fines as a means to strengthen the enforcement of competition law. I understand this issue has been the subject of extensive consideration both by the Department of Jobs, Enterprise and Innovation, in consultation with the Office of the Attorney General, and by competition law practitioners in general.
As the Senator stated, the matter attracted the attention of the troika which called for the introduction of legislation to strengthen competition law. The European Commission's intent in seeking this commitment arose from its desire to see the introduction of civil fines in the area of competition law. While the authority argued the case strongly for such fines, ultimately, given certain constitutional protections afforded to accused persons by Article 38.1, it has not proved possible to introduce the concept of civil fines as espoused by the authority. Both the authority and the troika accept this position, and together with the Department and the Office of the Attorney General, they have worked to produce the suite of alternative enforcements provisions contained in this Bill. Combined with the already substantial monetary and custodial penalties available under the Competition Act 2002, following enactment of the Bill, Ireland will have a robust and effective competition law enforcement regime.
The programme for Government contains a commitment to enact legislation to ban unfair practices in the retail sector. The Government will give effect to this commitment by including specific enabling provisions to deal with this issue in legislation being prepared to merge the National Consumer Agency and the Competition Authority. It is expected this legislation will be published later this year. The Government is strongly committed to ensuring Ireland continues to have vibrant agrifood and retail sectors, especially given the importance of these sectors to the national economy. The Government therefore considers it important there is a balance in the relationship between the various players in the grocery goods sector and is determined to achieve a balance which takes account of the interests of all the stakeholders in the grocery trade sector, including the interests of the consumer, and the need to ensure there is no impediment to passing on lower prices to consumers.
In light of the above, the Minister does not intend to accept Senator White's amendments either in respect of Section 3 or Section 4.
I welcome the Minister to the House. The Bill is well intended and the intention is to increase fines and imprisonment where convictions are delivered. I am also aware that the Bill forms part of structural reforms agreed under the EU and IMF memorandum of understanding. Is it enough and will it deal with the issue? I am not sure of this, but I appreciate it sets out to strengthen our position.
The Competition Authority was formed in 1991 and in the 21 years since then, there have only been 32 convictions, while no custodial sentence has been handed down. I went on the record years ago to say that I thought cocaine use was rife in rural Ireland, but the evidence today is that cartels are rife in Ireland. Adequate funding needs to be given to the Competition Authority which only has two gardaí operating at the moment. According to a former head of the Competition Authority, Dr. John Fingleton, anti-competitive practices cost the Irish economy €4 billion per annum. That is a major issue and could turn our economy around if we were able to tackle it adequately.
I agree with the sentiments expressed by other Senators that we should look at introducing civil fines. I appreciate we have advice from the Attorney General that we cannot do it, but surely the Supreme Court could ultimately decide whether we can do it. The Office of Fair Trading in the UK provides whistleblowers with £100,000 to come up with information that brings about convictions. I suggest we consider something like this. We could give €150,000 to a whistleblower to provide information that would, ultimately, assist the consumers of Ireland.
It is impossible for an ordinary person affected by sharp practices to take a case against companies found liable and who go through the courts system. I am aware of one man who has been trying for 16 years to sue a company that has been convicted of anti-competitive practices. The system is not in place to permit people to take cases in such situations.
I have no doubt this Bill will pass in its current form, but we should put a time limit on it and see how effective it has been. If we only have another 32 convictions in 21 years and if the system proves to be as ineffective as it was, we should look at the measures I am suggesting, namely, civil fines and rewards for whistleblowers.
I support what Senator Kelly has said. I welcome the Minister of State. Níl an Ghaeilge chomh líofa agam agus atá ag an Aire Stáit féin agus ag an Seanadóir Ó Clochartaigh, but it is nice to listen to it. We had a very good debate on this the previous day. The Minister, Deputy Bruton, was quoting Adam Smith and so on. I thought he would come back with much more radical things. This is a serious problem arising from the troika. Senator Kelly mentioned the cost of €4 billion as outlined by Dr. John Fingleton, and I will be talking about that in my own amendments later. There is a Bill due which will amalgamate the National Consumer Agency and the Competition Authority, and it may give us an opportunity to be more radical. The impression we got when the Minster was in the House the previous day was that he was taking on board many comments. They were all good, but he should do more. I was disappointed to see the same Bill come back to us and I would echo those sentiments. Perhaps the Minister of State should relay them to the Minister and the Department.
This is a serious problem. The sheltered sector is targeted by the troika and the IMF and it is doing a lot of damage in the country. I will be referring to it later in my own amendments, but I agree strongly with the general principles that Senator Kelly has outlined. We must have a Competition Authority that is up and about and protecting the consumer. There are far too few penalties for white collar crime in Ireland. People are able to collude with one another, with Departments and with regulators. To take the Minister of State's other area of responsibility, we now know, thanks to PricewaterhouseCoopers, that we had a water system which had an operating expenditure way ahead of Northern Ireland and multiples of what it cost in Scotland. We have to say that the regulator of the water industry in Ireland has not been doing his job up to now. That is true across a wide range of sectors and when we add them all up, the competitiveness of Ireland as a place to do business is seriously reduced.
I welcome what Senator Kelly said. If the Minister of State wants to be more radical, he will find that there will be much support in this House for more radical measures.
The very words I was going to use have been used by both Senators Kelly and Barrett. It seems we have a chance. The next Bill coming through will be to amalgamate the Competition Authority and the National Consumer Agency. At least two steps should be taken at that stage. I imagine it is far too late to take them now. There is a necessity to have civil fines and to provide a reward for whistleblowers. We have brought that up on a number of occasions in recent times, but those two steps will give teeth to the Competition Authority. The authority does not have the manpower that it needs. It certainly does not have it in respect of Garda enforcement. I am told two gardaí work with the Competition Authority. I am not sure if that is correct, but that is what I am told. If that is so, it is not possible to enforce what is needed, and there is a real need for it. We can do something about it, if not in this Bill, certainly in the Bill that is due before us soon.
I gcomhthéacs an méid cainte atá déanta go dtí seo, is cosúil dom go bhfuil aontú i bprionsabal maidir le fíneáil sibhialta. Ba mhaith liom tuairim an Rialtais a fháil. Tá ard-mheas agam ar an Ard-Aighne as ucht an obair atá á dhéanamh aici. Tuigim go mb'fhéidir go bhfuil pointí dlí ag baint leis an gceist seo, ach ó thaobh phrionsabail fíneáil sibhialta de, an bhfuil an Rialtas ar son an choincheap go mbeadh fíneáil sibhialta ann? Má táimid in ann fíneáil sibhialta a ghearradh ar ghnáth shaoránaí na tíre seo muna n-íocann siad an ceadúnas teilifíse nó rud éigin eile mar sin, nach é ról an Rialtais seift, mechanism nó bealach éigin a fháil le go bhféidir fíneáil sibhialta a chur i bhfeidhim?
Just for the benefit of other Senators, I think there is broad agreement that the civil fines principle is the way to go on this Bill. That seems to be from where the Competition Authority was coming. I appreciate and respect the view of the Attorney General. Surely if we can impose civil fines upon citizens for other misdemeanours, would the Government not agree that in principle the civil fines route is a good route to go down? How can that be done? The issue seems to be that the present system, after 32 years, has only secured 32 convictions, with only two of those carrying any substantial result, one on price fixing in the fuel industry and the other on motor sales. Does the Minister of State agree with this principle and, if so, can we find a mechanism to introduce civil fines at a lower level that would not be unconstitutional? Would the Minister of State be willing to introduce an amendment on Report Stage that would reflect that?
I welcome the views expressed by Senators Kelly, Barrett, Quinn and Ó Clochartaigh. Sticking to the civil issue, the advice to all Governments from Attorneys General has always been that we would be in breach of any provision in the Constitution if we did so; that is why there will not be civil fines. The Competition Authority and the troika both wanted civil fines but they are happy with this legislation. While it does not give us everything we might argue for right now, it is much stronger. The penalties now allow for imprisonment for up to ten years for a serious breach of this legislation. Someone thinking about anti-competitive activity will spend a lot longer in jail and the provision will apply to everyone in a company who may have had or acted upon direct knowledge of such activity. The legislation is much stronger than what went before it. It has taken account of all the views that have been raised by the parties, the statutory agency and the troika. This is the best way to get the results the Senators want, or at least significantly increased penalties.
Senators might already have a summary of the Competition Authority's enforcement record since 2000. There have been 33 convictions, 14 for Citroen cars, comprised of eight individuals and six undertakings, and a conviction against Ford. Home heating oil investigations led to 17 convictions. There has been one conviction for petrol price fixing and for hedge cutting three were found not guilty, with eight acquittals for Mayo waste cases. Two civil cases have been won involving the Licensed Vintners Association and the Beef Industry Development Society. A case was lost against the Irish League of Credit Unions following an appeal of a High Court decision. Three other cases were settled.
Senators asked what increases there would be in the authority's resources. Since the Second Stage debate, a review of the resourcing of the authority has been undertaken and in accordance with the EU-IMF commitment in this area, a report on whether resourcing is sufficient to allow adequate enforcement capacity of the legislative framework has been compiled. On foot of this review, I am pleased to announce the Minister for Jobs, Enterprise and Innovation has approved an additional ten staff for the enforcement function of the authority. The current staffing level stands at 39. The necessary steps to fill these posts are being undertaken within the Department and authority in consultation with the Department of Public Expenditure and Reform.
I appreciate the Minister of State's reply. There have been convictions but how many people have ended up behind bars? None. That is the crux of the issue. There is a sense in some industries that the Bill is surrounded by optics. I appreciate the Minister of State is coming from the right place but are we dealing with the issue? The difference between a criminal and a civil case is the burden of proof is so much higher in a criminal case, making it much more difficult for a potential whistleblower. In Britain there is compensation for whistleblowers of up to £100,000 and that is an incentive. In this State we had the case of Louise Bayliss in the HSE, where she blew the whistle and it was clear from that how hard it was for a person to come out because of potential ostracism and scapegoating, and the subsequent loss of earnings if he or she cannot find a job.
We must do more to encourage those who want to end these practices. There is a sense that the perpetrators are getting off lightly. They are losing the cases but they do not end up behind bars. The civil route, therefore, is the way to go. Would the Government agree the civil route is the way to go if we can find a mechanism to do that? If it means a constitutional amendment is necessary, should we consider that? There is a great sense that this will not solve the problem.
On the staffing issue, we agree that it is hard for the Competition Authority to do what it needs to do with current staffing levels. I welcome the increase in staffing from 39 to 49 but it previously had 59 staff so it is still understaffed.
I am glad we agree the penalties should be increased when the Bill is passed and that the penalties for those who break the law are much tougher. Imprisonment of a person for ten years is very serious. The legislation allows for the doubling of the penalty from five to ten years. That must be paramount in the mind of anyone considering breaking the law.
I worked with a whistleblower, Eugene McErlean, who did a tremendous service by revealing overcharging by the banks. The protection of whistleblowers, particularly on where they work and the fact they might be fired if they speak out, is paramount and the Minister for Public Expenditure and Reform is working on whistleblower legislation.
There are arguments both for and against financial benefits for whistleblowing. An argument that could be used is that in a significant case where a person being charged could face up to ten years in jail, if the evidence was being given by a whistleblower who had been paid for whistleblowing, it could be more difficult to secure a conviction than if the whistleblower was protected in his or her place of work. The risk being taken would not lead to financial benefit but neither would it lead to a loss of employment. The issues surrounding whistleblowing are very important and I am confident all of the issues related to it will be looked at in the forthcoming Bill. At present, however, the Minister is of the view that there will not be payment for whistleblowing.
Governments have always been great for telling us why they are doing things. The Government looks across the Irish Sea and says it is doing something because the British are doing it. Now the British are doing this so I suggest some research is done into how effective the whistleblowing legislation is there. Has it saved money? It has to be worthwhile to pay a whistleblower €100,000 or €150,000 if he or she saves the Exchequer tens of millions of euro. We should not rule it out. I appreciate that the Minister of State thinks ten years imprisonment might deter much of this.
It might deter the Minister of State, and me too, but it may not deter people who are making millions of euro from their involvement in cartels.
When the Bill is passed we should keep it under constant review. If it is proved to be ineffective we must deal with that with a hard hand.
I welcome the legislation but I would like the Minister of State to give us an undertaking that if this does not prove to be effective we will revisit it at an early stage. It is worrying that there have been only 32 convictions in 21 years and that no one has gone to prison. We are all conscious of anti-competitive practices. Everything we do must be in the interest of the consumer.
A situation was brought to my attention after Christmas. A large supermarket chain forced its suppliers to stack shelves to a high level and provide vast stock which was not sold over the Christmas period. The supplier was forced to take the goods back and did not get paid. That is an uncompetitive practice. Much of the food was perishable and went to landfill. That is outrageous. Such a practice forces small shops out of business because they cannot compete and it imposes huge costs on suppliers who are struggling to survive. They are forced to supply vast amounts of perishable goods and are not paid if the goods are not sold. We must be conscious of anti-competitive practices.
Senator Ó Clochartaigh is right when he says many small shops are being forced out of business because they cannot compete. I recently spoke to a small shopkeeper who told me he cannot buy goods from producers for the price at which they are being sold in supermarkets. He was buying goods in large multiples and selling them at a small profit in his shop. It was cheaper for him to do that than to buy directly from a producer. That is anti-competitive and we must tackle it.
There is a job of work to be done. We need to keep a close eye on how this legislation is working. If it is not successful we will need to revisit it.
I strongly support Senator Kelly with regard to the whistleblower system. If it is working in the United Kingdom we should look at what is working in other jurisdictions and take it on board.
I welcome the Minister of State. I agree with Senator Kelly about whistleblowers. We are paying some bankers €500,000 per annum to tell us what we already know. If someone were paid €500,000 to clear up cartels it would be money well spent, rather than going to a banker. The case for providing extra resources to the Competition Authority is a good one. We should put more resources into this area. Cartels cost money and jobs.
One of the benefits of the Border is that when Asda arrived in Northern Ireland large supermarkets south of the Border dropped their prices. The arrival of Asda gave multiples in the South a kick up the ass. Some multiples in County Donegal dropped their prices because people were flowing across the Border to Asda. The arrival of Asda was good for Donegal, even if we did not shop there because it forced the big multiples to reduce their prices. The same may be true of the Minister of State's county.
Sinn Féin may not agree but there is a practical advantage to having the Border. If we were a 32-county State there would be more scope for cartels. When anti-cartel legislation is enacted no company in Ireland should be able to manipulate the market. I assure Senator Ó Clochartaigh that I do not use this example for any reason except to say the more competition we have the more our cost base is reduced.
The whistleblower idea would be a step forward. We should monitor the effectiveness of the UK whistleblower system. We should not rule that out.
I thank the Minister of State for his response. There seems to be agreement on both sides of the House that the Bill is not adequate. Disappointment on the Government side is more diplomatic and expressed in nice soft tones. Senator Kelly's way of speaking was very gentle.
As the Government intends to introduce legislation to amalgamate the Competition Authority with the Consumers Association of Ireland, it would have been preferable to combine this Bill with the other two. The introduction of this Bill is too speedy. Too many issues are not covered in it. All matters should have been combined and an adequate Bill drafted. The Bill is fine in principle but it is not up to scratch.
The Fine Gael election manifesto promised a referendum on this issue. For that reason, Fianna Fáil will be calling for a vote on the amendment.
The Seanad Divided:
For the motion: 29 (Ivana Bacik, Paul Bradford, Colm Burke, Paul Coghlan, Michael Comiskey, Martin Conway, Maurice Cummins, Jim D'Arcy, Michael D'Arcy, John Gilroy, Jimmy Harte, Aideen Hayden, Fidelma Healy Eames, James Heffernan, Imelda Henry, Lorraine Higgins, Caít Keane, John Kelly, Denis Landy, Marie Maloney, Mary Moran, Tony Mulcahy, Michael Mullins, Catherine Noone, Mary Ann O'Brien, Marie Louise O'Donnell, Susan O'Keeffe, Tom Shehan, John Whelan)
Against the motion: 15 (Sean Barrett, Thomas Byrne, Mark Daly, Marc MacSharry, Paschal Mooney, Rónán Mullen, David Norris, Darragh O'Brien, Ned O'Sullivan, Trevor Ó Clochartaigh, Brian Ó Domhnaill, Averil Power, Feargal Quinn, Jillian van Turnhout, Mary White)
Tellers: Tá, Senators Paul Coghlan and Susan O'Keeffe; Níl, Senators Ned O'Sullivan and Mary M. White..
Question declared carried.
I move amendment No. 3:
In page 6, before section 5, to insert the following new section:
5.—Section 30 of the Principal Act is amended by inserting after subsection (1) the following:
"(1B) Where, following an investigation under this Act into an action, it appears to the Authority that the action adversely affected a person or contravenes section 4(1) or section 5(1) of this Act, the Authority may recommend to the Department of State concerned—
(a) that the matter in relation to which the action was taken be further considered,
(b) that measures or specified measures be taken to remedy, mitigate or alter the adverse affect of the action, or
(c) that the reasons for taking the action be given to the Authority, 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 recommendation.".".
Beidh muid ag déanamh cuid de na pointí céanna a rinne muid roimhe seo. Tá cuid mhaith den tuairimíocht céanna i gceist. I bprionsabal, tá Sinn Féin ar son an Bhille atá á thabhairt chun cinn. Ní dóigh linn go dtéann an reachtaíocht sách fada. I ndáiríre, ní rachfaidh an Bille i ngleic leis na mbunfhadhbanna iomaíochta atá againn sa tír seo. Rinne mé léiriú ar an méid sin nuair a labhair mé ar na leasuithe eile roimhe seo. Níl aon dabht faoi ná go bhfuil fadhbanna iomaíochta againn. Tá grúpaí atá ag feidhmiú sa tír seo - faoi rún nó go hoscailte - ag socrú praghsanna, ag brú daoine amach as gnó agus ag diúltú ar cothrom na féinne a thabhairt do chomhlachtaí beaga.
We are, undoubtedly, facing serious difficulties in regard to competitiveness, as discussed. An issue not yet referred to is the low-cost sale of alcohol in supermarkets which is having a detrimental impact on local shops and pubs. There are also issues for the hospitality industry, with hotel bedrooms, for instance, being sold at prices which make it almost impossible for smaller, family-run businesses to compete. An industry that has never been tackled by the Competition Authority is the concrete industry. Incidentally, a former chairman of the authority, Dr. John Fingleton, who is now working in a similar role in Britain has been very critical of its approach as not going far enough.
We have had a broad discussion in this House on civil penalties, which is another issue to consider. They have been introduced in Britain, as I understand it, where civil and criminal cases can run in parallel. A headline case was taken recently against British Airways, for instance, which resulted in a multi-million pound settlement for the individual citizen who took it. If such a system can operate in Britain, surely we can introduce a similar regime in this country. We are all in favour of the imposition of civil penalties, where possible, because criminal penalties do not seem to be working, as evidenced by the fact that we have had 32 convictions, but nobody has ended up behind bars in 21 years. That record is not much of a disincentive to multi-million pound cartels and golden circles - call them what one may - to indulge in anti-competitive practices. I expect the Minister of State will probably respond to my proposal with the standard line on advice from the Attorney General. Will he outline the rationale in this regard? Is it based on the level of the fine? If so and if the level of the fine was reduced in a civil case scenario, would that serve to overcome the constitutional impediment? Assuming that is the case, it might well be the route we should pursue.
Whenever the Government and the troika talk about competitiveness, there always seems to be an associated assault on low-paid workers. This is something to which my party is completely opposed. While bona fide traders will always be willing to pay a decent wage for a decent day's work, some of the larger multinational companies, in particular, can sometimes force the competitiveness issue, which leads to calls from unscrupulous employers for reductions in the pay of workers at the lower end of the scale. Sinn Féin does not buy into this. Many of the difficulties in regard to competitiveness are a result not of wage pressures but of other issues such as upward-only rent reviews. Most of the business people to whom I have spoken who are finding it difficult to trade identify the inability to renegotiate their rental agreement as one of the most significant factors.
We welcome the Bill as a step in dealing with the issues that undermine competitiveness, but, unfortunately, it does not go far enough. Cartels will continue to abuse their market dominance and thus undermine the economy. I could not let Senator Jimmy Harte's comments on the retention of the Border go without some comment. It is the most ludicrous argument I have heard for retaining partition that an all-Ireland economy would increase the scope for cartels. That is an absolutely preposterous scenario to bring forward. On the contrary, the opposite would be the case. For most of the businesses such as the Senator's own which deal in the Border region, a 32 county economy would lead to a reduction in the volume of paperwork because they would be dealing with one jurisdiction instead of two. Many of the Senator's Government colleagues have commented on the lower cost of petrol and diesel in the North. In an all-Ireland economy there would be scope to harmonise these costs and even to argue for a smaller Government take on motor fuels. There would be only one Executive, perhaps one Seanad and one Dáil, which would lead to substantial savings on an all-island basis. This might be one of the arguments for the retention of the Seanad, that we could amalgamate it-----
I appreciate that. However, overhead costs are of particular concern to most businesses. As such, Senator Michael Mullins is correct that we must address the question of water charges. As he knows, the Executive in the North has no means of raising funds other than through rates and the cost of water is based on the block grant from Westminster-----
Go raibh míle maith agat, a Leas-Chathaoirligh. The argument that we reduce costs and red tape is an argument in favour of adopting a 32 county approach to the economy. Anyone who lives along the Border will attest to that fact. Having one tourism authority, as opposed to three, would certainly make matters much better for the hospitality industry. Waterways Ireland and the IRFU have proved what I describe can be done. Perhaps Senator Jimmy Harte might have a word with his colleagues in the respective soccer associations to see if they could work towards adopting an all-Ireland approach.
In the context of the serious matter under discussion, on Committee and Report Stages in the Dáil my party called for the insertion into the Bill of the ability to take civil proceedings in order to expedite matters in respect of anti-competitive practices. However, the Government opposed our proposals in this regard, which is a shame. We request that this matter be reconsidered. The modest amendment we have tabled in this House requests that the Government and those which succeed it respond to proposals brought forward the Competition Authority. We will be engaging in further contact with the authority to ascertain where it stands on this issue. I appreciate the Minister of State's indication that it is now broadly in favour of what is set down in the Bill which has not changed since Second Stage. We will, however, be contacting it to seek further clarification on the matter.
We are not calling on the Government to act on recommendations but rather to respond to the Competition Authority and explain the action it either will or will not take in respect of anti-competitive practices. The basic issue is that amendment No. 3 is designed to facilitate the introduction of civil penalties. Perhaps the Minister of State might indicate whether the amendment would remain unconstitutional if the level of the penalties was lowered. Does he agree, in principle, that if something of this nature can be introduced in the United Kingdom - by the former head of the authority in this country who stated it would be a good idea if it were implemented in Ireland - and even if a constitutional amendment of some kind was necessary, we should proceed with what is envisaged in the amendment in order that the competitiveness issues raised can be tackled?
Caithfidh mé a rá, mar a dúirt mé cheana, gurb í tuairim an Ard-Aighne nach féidir é a dhéanamh, mar a luaigh an Seanadóir, gan reafrainn a bheith ann. Tá sé soiléir gur féidir fíneáil a ghearradh sa chúirt, ach ní féidir l'aon fhoras seachas na Revenue Commissioners thaobh civil fine a ghearradh. Is féidir fíneáil a fháil uathu siúd. As simple as it might appear, even a minor traffic offence, in respect of which a court hands down a fine, is still a criminal offence and falls into this category. I accept, however, that it will not appear on one's record in the same way other fines might. As stated, the clear advice to the Government is that there should not be civil fines. As the Senator acknowledged, the Competition Authority and the troika are satisfied that what is envisaged represents significant progress.
It appears amendment No. 3 would give the Competition Authority the power to investigate an action by a Department. A Department acts as an undertaking only when engaged for gain in the supply of goods or the provision of services. Departments rarely act as undertakings and are, therefore, outside the scope of the Competition Act. The authority has no power to investigate an action or the activities of non-undertakings. The amendment would also appear to give the authority the power to recommend to Departments that they reconsider their actions, take certain steps to remedy alleged contraventions and account to it for their actions. It would further appear to give the authority the right to act where actions do not contravene competition law but do adversely affect a person. Such a power would divert the authority from its actual function, namely, the investigation of breaches of competition law.
More generally, section 30 gives the Competition 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. The authority may and has on many occasions reported on how competition is working in different sectors and made recommendations to improve how competition works in these sectors. Such recommendations are addressed to the relevant Minister or public body, as appropriate.
The key point is that if new legislation is proposed, the sponsoring Department will send a memo to the Government. Such memos are automatically circulated to the Competition Authority and those responsible for consumer affairs. Their advice will be included in the memo to the Government. In other words, before action is taken, any issue relating to competition or consumer affairs is commented upon. The authority is party to any memos on these issues. Legislation is proofed in respect of any anti-competitive measures it may contain before it is the subject of a Cabinet decision.
The Minister, Deputy Richard Bruton, has engaged in a process to report on progress made in implementing Competition Authority recommendations to date. Of the 170 plus recommendations made between 2004 and 2010, only 13, or 7%, remain under active consideration. The vast majority have either been accepted and implemented, accepted in principle but not yet implemented, rejected or overtaken by other policy developments. The Government has considered these and Ministers have been urged to accelerate their consideration and implementation, where appropriate, of the relevant outstanding recommendations in the context of enhancing competitiveness within the economy.
In respect of future Competition Authority recommendations, the Minister with relevant policy responsibility must within nine months of the publication of such recommendations bring a report to the Government in which he or she outlines his or her position on their implementation. The next such report is expected to arise in the context of the action plan for jobs which calls on the authority to identify any sheltered areas of the economy in which competition is restricted and to commission studies in such areas, where appropriate.
Requiring a Department of State to report to the Competition Authority on its response to recommendations made by the authority gives considerable power to an unelected statutory body. While the authority may be expert in the area of competition, it does not have the wider public policy role of Departments of State. The Government, Ministers and Departments must consider issues from more than one policy perspective. As stated, however, all legislation is proofed in respect of anti-competitiveness measures it may contain. I hope I have satisfied some of the arguments brought forward by the Senator.
What the Minister of State has described is the theory involved. However, if one considers the Public Transport Regulation Act 2009, the Department said nothing. This is recorded in the screening regulatory impact analysis of the legislation which indicates that the Department either said nothing or broadly approved. That legislation was highly anti-competitive in nature, particularly as it was sponsored by a Department which was supposed to be promoting entrepreneurship. Where Ministers and Departments infringe the principles of competition policy, the Competition Authority should indicate this fact. I do not see a case for granting exemptions in this regard.
We are concerned that two individuals might decide to sell ice cream on Bull Island or in Blackrock in the Minister of State's constituency on the same Sunday afternoon and at the same price. As stated on Second Stage, however, most collusion occurs between Departments and around the Cabinet table. In recent times Paul Gorecki produced a most interesting paper in which he pointed out that the previous Government was moving against competition, engaging in increasing levels of ministerial interference and rigging markets. I will provide a long list in this regard when we come to discuss the amendments tabled in my name.
I do not believe the protection to which the Minister of State referred is adequate. I do not care who - whether it be Ministers or civil servants - is restricting competition in the economy. The Competition Authority should promote competition. I do not know whether we should transfer everything to the Department of Justice and Equality and, as is the case with the American system, make those who engage in the collusion to which I refer subject to penalties. The current system is too cosy. Some people have what is called "regulatory capture", which ought to be a matter of concern. The Competition Authority must represent every citizen who is in favour of competition against anybody - regardless of who he or she may be - who is preventing competition. Given that in many cases Departments have a record of engaging in restrictive practices and preventing competition, they should not be exempt.
In a recent case in the United Kingdom both the Office of Fair Trading and the Competition Commission judged that the Civil Aviation Authority in Britain was a little too chummy with the British Airports Authority. The solution arrived at was to force the latter to divest itself of its airports. It sold Gatwick and in the past week Edinburgh airports. The British competition authority did not say these are civil servants getting together in the national interest so it could not possibly investigate them. In fact, they may be more dangerous than two people rigging the price of ice cream on a sunny Sunday afternoon in Blackrock, County Louth, and a real competition policy would have to target that issue.
Tacaím leis an méid atá ráite ag mo chomhleacaí, an Seanadóir Barrett. The aim of the amendment is to give the Bill more teeth. Best practice across Europe places responsibility on a government to respond to a report by the relevant competition authority within a specified timescale. In Italy, for example, the relevant competition authority has the ability to table legislation for consideration. In this State there is no obligation to consider, let alone act, on the recommendations of the Competition Authority.
If the Government is serious with regard to dealing with corrupt practices, it should include the clause on the obligation to respond to recommendations of the authority, one which must outline the Government's proposed actions with regard to each recommendation. We see no reason this gaping hole in the legislation cannot be amended. If there is a form of collusion between a State apparatus and a private sector operator in any area, it must be tackled and the Competition Authority must be given the powers needed.
The definition of "undertaking" in the Bill includes a person, an individual, a body corporate or an unincorporated body of persons engaged for gain in the production or supply or distribution of goods or the provision of a service. If any one of those entities acts in an anti-competitive manner, the Competition Authority has to pursue them under this legislation. While I appreciate Senator Barrett's point, the advice I have is that no one can avoid the rigours of the law should the Competition Authority believe they should pursue them legally for anti-competitive trading. Departments are not expressly included in the Bill because they are not undertakings as such. Notwithstanding that fact, if a portion of their activity is deemed to be an undertaking, they then are the subject of the law.
I move amendment No. 4:
In page 8, before section 6, to insert the following new section:
"6.—(a) Subsection (1) of section 30 of the Principal Act is amended by inserting the following paragraphs after paragraph (g)—
"(h) to study and analyse any practice or method of competition or decision with implications for competition in markets for goods and services that has its origins in a decision or action by a body working with or on behalf of a Minister of Government or Agency of Government;
(i) to analyse the actions and practices of all regulatory agencies, statutory bodies and ministerial departments of the State for violations of Part 1 of this Act;
(j) the right to publish to the public-at-large non-commercially sensitive findings and analyses of firms, regulators, agencies and sectors that that Authority has conducted as part of this Act;",
(b) in paragraph (b) of subsection (4), by the substitution of "section 14A" for "section 14".".
I believe section 14A was proposed by the Minister for Jobs, Enterprise and Innovation, Deputy Bruton. Perhaps it was a typing mistake or a drafting error that got them mixed up. There has been no collusion between myself and the Minister, considering we are speaking about joint practices.
I want the Competition Authority to play a more dynamic role, a point alluded to by Members on all sides of the House. I hope we will get a date of when the next competition legislation comes through. As the Minister will note, there is more appetite for competition policy in the Seanad than was previously thought.
We need someone to regulate the regulators. There have been many unsatisfactory procedures in the past. Paul Gorecki of the ESRI drew attention to these in a recent paper. Energy prices, for example, have been pushed up because a former energy Minister interfered by imposing, as the OECD stated, unrealistic wind-farm targets on the energy sector. The Commission for Aviation Regulation, CAR, was pretty well destroyed by the then transport Minister, Noel Dempsey, who ordered it to increase charges by 41% so that the entire cost of the over-investment in two terminals at Dublin Airport was borne by the user and not the organisation. Interestingly, the orders for this appeared on the CAR website far sooner than they appeared on the then Department of Transport website. There was interference in the independence of that regulator.
Did we confuse the objectives of bank regulation by seeing the Central Bank and Financial Services Regulatory Authority as a promotional body for the IFSC and lost sight of regulation? When a sector costs the economy 40% of GDP when it has to be rescued, one has to question the competence of the regulators in charge of the sector. Everyone on all sides of the House has questioned that competence in the case of banking regulation. The Chartered Accountants Regulatory Board, CARB, has still not reported on what kind of accounts were prepared for these banks and on which the State was induced to invest in them.
The Public Transport Regulation Act gave the entire bus system by a direct award contract to deliberately avoid competitive tendering. That was sent to every Department in the screening regulatory impact analysis and all either said nothing or agreed. Accordingly, there is no protection for the consumer or potential new entrants. Someone had to take the school bus contract to court to know why it is not open to competitive tendering. There have been problems with refuse collection and the belief among some local authorities that it should be given to chosen companies rather than be determined by competition in which the consumer would decide.
Mr. Justice Bryan McMahon criticised how the then Department of Transport conducted itself in the awarding of the Swords Express bus licence by stating it had usurped the functions given to it in trust by the Oireachtas. There was a similar judgment by the Chief Justice, John Murray, on the way the Department of Health conducted itself with regard to controlling the market in health insurance, stating it had tried to usurp the functions of the Legislature.
All of what Senator Ó Clochartaigh and others have raised seems to happen every day. They are seriously damaging the competitiveness of the economy and they are anti-competitive in their intentions. I am sure the Department of Transport deliberately held up the Swords Express licence for two and a half years and then gave it to CIE in five days. Mr. Justice Bryan McMahon commented adversely on how the Department conducted itself.
No one should be exempt from being investigated by the Competition Authority. The British Civil Aviation Authority got too cosy with the operators of the UK's airports. Dr. John Fingleton, a former Trinity College Dublin colleague, and now head of the Office of Fair Trading, intervened to make a better market substitute for that system of failed regulation.
The amendment proposes to analyse the actions and practices of all regulatory agencies, statutory bodies and Departments for violations. The favourable treatment of the pharmaceutical industry in the Republic of Ireland meant there was a massive difference in the price of pharmaceuticals North and South of the Border as there was a much stricter regulatory regime for pharmaceuticals. We have come back a bit from that.
The amendment mentions "the right to publish to the public at large non-commercially sensitive findings and analyses of firms, regulators, agencies and sectors that the authority has conducted as part of this Act." In other words, I do not want the emphasis to be in relatively small instances - home heating oil and car prices were mentioned - and we should go for the entire gamut of public and consumer expenditure, with a much more dynamic Competition Authority acting on behalf of the consumer. There is a paper supporting what I am saying by Mr. Pat Massey and presented at the Kenmare conference on 15 October 2011. The World Economic Forum ranks Ireland as 25th out of 139 countries in the effectiveness of competition policy, and Mr. Massey indicated this put Ireland behind most of its EU partners and OECD countries, suggesting considerable scope for improvement. We mentioned this to the Minister, Deputy Bruton, on the last occasion, and the purpose of the amendment as proposed is to create a competition policy with teeth.
We are not satisfied with the very small number of prosecutions mentioned by the Minister of State. This is an attempt to introduce some kind of dynamic to the process. We were elected - in the case of the Seanad it was this time last year - to reform, and the public made that decision to change the vast majority of people in the Dáil, with 42 new Senators. Established institutions must be reformed and competition policy should be far more energetic and active. If the Minister of State cannot accept this amendment today, I ask that it be considered when the next competition Bill comes to the House. It should be done quickly because this is not, according to the World Economic Forum, one of our shining lights. I presume that the long tradition of protectionism has led to certain firms of solicitors and other people getting certain imports banned and tariffs or quotas imposed. That cosy relationship between insiders and outsiders in the Irish economy has come into existence but has not been properly tackled.
I assure Senator Barrett that the solicitors in the country are not the cause of anti-competitive practice. As proof, the first case taken to a European court relating to anti-competitive practice was dealt with by a firm of Cork solicitors against Comhlacht Siúcra Éireann, which refused to sell sugar to distributors and decided to sell directly to shops. That was one of the first cases taken to a European court dealing with anti-competitive practice. That court made a judgment against Comhlacht Siúcra Éireann in that case. We had just joined the European Community and there was a new forum available to ensure competition in Ireland.
I will raise an issue relating to health care, particularly VHI and the role it is playing in the area. I have filed a complaint with the Competition Authority with regard to the following matter. In the past 95 years we have no new private hospital built or opened in Cork. Those behind the Mater Private Hospital in Dublin are prepared to come to Cork and offer private health care, and two of the health insurers are prepared to provide cover for patients and pay for care in the proposed new hospital. However, VHI has decided otherwise, which is anti-competitive for two reasons. First, the VHI is prepared to quote under the cost of the existing health care providers in Cork and, second, the fewer beds there are in the private health care centre, the fewer consultants who can practise. The charges are therefore set in stone.
I have repeatedly raised the need to reduce the cost of health care. Last year we spent €13.4 billion on health care and we got €13.317 billion in income tax. If there is any sector that needs a reduction in cost it is health care. This commercial State company has decided it will not allow competition, which is absolutely disgraceful. Its role is not to decide how many private beds are used; it should instead ensure that the people to whom it provides cover get an adequate standard of cover and are prepared to pay for that cost. The company seems to be taking on a totally new role which is to regulate who can open private health care facilities. That area should be carefully examined. I accept that the Minister does not have a direct role in how VHI arrives at its decisions but the company's role is not to control the number of available facilities. The issue must be dealt with in taking into account the cost of health care. I understand the company is hiding behind a case pending in the courts that deals with a different issue. It is the wrong way to arrive at a decision and now, more than ever, we must have competition in that area. We must tackle the problem.
Senator Barrett's proposal should be kept in mind in dealing with this issue and the role of State agencies. We must ensure that any anti-competitive practice is not allowed to continue in certain areas, and serious consideration should be given to the matter.
Táim ag éirí le tacú leis an leasú atá á chur chun cinn ag mo chomhghleacaí, an Seanadóir Barrett. Aontaíonn Sinn Féin leis an mbun-phrionsabal átá sé á chur chun - nár chóir go mbeimis ag glacadh le haicme áirithe den phobal atá ag déanamh go maith agus iad ag fágáil daoine eile faoi chois ar bhealach aicmiúil.
I stand in support of the amendment from my colleague, Senator Barrett, and we agree with the thrust of his argument. Sinn Féin policy is to ensure that all people are treated equally and everybody gets a fair crack at the whip. In no state should there be a position where the citizens are put in second place to an elite group, cartel or golden circle of any sort. Considering the Moriarty, McCracken and Mahon tribunal findings, there is a sense in the community and among people in general that this has been happening. We often get castigated by more conservative economic groups about Sinn Féin's economic policy but our idea is to examine the levels of pay in the Civil Service, bring them to more equitable levels and tax people who make more money in order to bring down their level of pay. We also wish to introduce wealth taxes, etc.
We note some of the reasons given by the Government, for example, for having to pay so much to chief executives in the likes of Bank of Ireland, such as a fear that they could go to a public sector job that would pay as much. We could debate the amount paid to certain heads of semi-State organisations, with some being paid up to €500,000 per year. We are told if those people went to the private sector, they would find pay of equal standing. If we followed Sinn Féin's policy, which includes introducing a 48% tax rate or taxing those with more than €1 million in wealth, it would make this State much more competitive. Most importantly, it would bring down overheads for citizens and the cost of business. Leaving the citizens at the heart of the argument is vital in this debate.
Senator Barrett is absolutely correct in saying that any activity of this sort, which is detrimental to the citizen, creates an elite or a position where people are locked out of a market or prices increase to suit an elite, must be tackled. The Competition Authority must be given the wherewithal to do that on our behalf, and the Government should move on the actions of the authority. Táimid ag tacú leis an moladh atá á chur chun cinn ag an Seanadóir Barrett.