Jack Wall (Kildare South, Labour)
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Question 403: To ask the Minister for Enterprise, Trade and Employment his views in regard to the submission accompanying this question; and if he will make a statement on the matter. [5118/06]

Micheál Martin (Cork South Central, Fianna Fail)
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I am writing directly to the Deputy in response to the submission he has sent me. In the meantime, I have set out below my views on each of the specific points made in that submission in regard to the Competition (Amendment) Bill 2005.

It is claimed that the Bill does not adequately deal with predatory pricing. He refers to my Department's report and analysis of the Restrictive Practices (Groceries) Order. It is true that the report does state that it is unlikely that any firm would be considered to be dominant in the grocery market if it holds less than 35% market share, and that on that basis no grocery retailer would be considered dominant in the national Irish market. However, as the report makes clear, the matter is more complex than this. "Dominance" under section 5 of the Act can be measured either in the State or "in any part of the State". Therefore, the existing legislation is sufficiently flexible to allow the Competition Authority or the courts to tackle predatory pricing in all circumstances, including small local markets. Specifically, an individual supermarket outlet in a small rural town, whether part of a multiple chain or otherwise, could be considered dominant, in certain circumstances, within the meaning of the Competition Act 2002, and thus prosecuted if it engaged in predatory pricing.

The submission further states: "Thus with the abolition of the Groceries Order predatory pricing is no longer banned in the Irish Grocery sector." This is completely inaccurate. Predatory pricing is already prohibited by section 5 of the Competition Act 2002, which outlaws the abuse of a dominant position in a market. The Competition Act 2002 is based on Articles 81 and 82 of the EC Treaty. There is a strong body of case law which shows that these provisions can be and are used to prohibit and punish predatory pricing. Furthermore, predatory pricing is punishable under Irish competition law by fines of up to €4 million or 10% of turnover. These penalties are much greater than those which applied under the groceries order and are likely to act as a real deterrent to any business contemplating predatory pricing. Finally, the Competition Authority has extensive powers and a dedicated division of expert staff which investigates allegations of companies abusing a dominant position. The circumstances of each allegation are unique and each complaint is assessed on a case-by-case basis.

The submission refers to "restriction of offer". At this point, I am not in favour of imposing statutory rules in regard to restriction of offer type arrangements. Such a measure would be extraordinarily difficult to enforce and would represent an interference in the freedom to trade that is not in the interests of guaranteeing fair competition in the grocery market.

With regard to credit terms, I would point out that on 7 August 2002 the European Communities (Late Payment in Commercial Transactions) Regulations 2002, SI No. 388 of 2002, came into operation on foot of Directive No. 2000/35/EC of the European Parliament and of the Council. These regulations apply to all commercial transactions in the public and private sectors. They provide that interest shall be payable in respect of the late payment of a commercial debt. A payment is regarded as late if it has not been paid 30 days after an invoice or goods have been received or by a date as agreed by contract. The regulations also provide that compensation may be claimed for debt recovery costs. The use of terms that are grossly unfair may be unenforceable and such terms may be challenged in court. Criteria for testing whether terms are grossly unfair are specified in the regulations and such terms may also be challenged by organisations representing small and medium sized enterprises.