Written answers

Tuesday, 19 January 2010

Department of Enterprise, Trade and Employment

Consumers' Rights

9:00 pm

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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Question 188: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if her Department has made representations to the European Commission regarding the fact that many retailers cannot purchase from suppliers' sterling price lists and may only purchase goods from Euro price lists; and if she will make a statement on the matter. [1321/10]

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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Responsibility in relation to the negotiation of commercial contracts between parties such as retailers and suppliers is essentially a matter for the contracting parties themselves. It should be appreciated that such negotiations are not homogenous in their nature and reflect the fact that considerations may apply in relation to negotiations between a supplier and a particular retailer that do not apply in relation to negotiation between that supplier and another retailer. Such considerations would include issues such as volume discounts etc. The Deputy will appreciate, therefore, that the fact that a supplier and a retailer may agree to contract for the supply of goods at a particular price does not necessarily mean that price will apply in respect of every negotiation between the supplier and other retailers for the supply of those goods given the variants that apply in relation to different negotiations.

In so far as competition law has an effect on business relationships in the grocery goods sector, Section 4 of the Competition Act 2002 and Article 101 of the Treaty prohibit agreements, decisions and concerted practices that have as their object or effect the prevention, restriction or distortion of competition. Anti-competitive practices such as price fixing, limiting or controlling production and markets, market sharing, applying dissimilar conditions to equivalent transactions with other trading parties (thereby placing them at a competitive disadvantage) and making the conclusion of contracts subject to the acceptance of supplementary obligations are specifically prohibited.

However certain agreements or concerted practices entered into between two or more undertakings operating at different levels of the production or distribution chain, which relate to the conditions under which the parties may purchase, sell or resell certain goods or services within the State may fall outside the scope of Section 4 or Article 101. For example, non-exclusive distribution agreements whereby the supplier agrees with the buyer to supply the contract goods or services to the buyer for a certain territory but without any restriction on supplying other buyers within that territory are deemed to be outside the scope of section 4. It is also the case that certain agreements and practices can avail of a block exemption from competition rules, others require assessment on a case by case basis while hard-core anti-competitive practices (e.g. price fixing) is always prohibited.

Section 5 of the Act 2002 and Article 102 of the Treaty prohibits abuse of a dominant position. The creation or existence of a dominant position does not breach competition law, rather it is the abuse of that position that constitutes the breach. The Competition (Amendment) Act 2006 strengthens the provisions of the 2002 Act by prohibiting practices such as: the imposition of resale price maintenance in regard to the supply of grocery goods (resale price maintenance is the practice whereby manufacturers or suppliers specify the minimum prices at which their goods may be resold); unfair discrimination in regard to the supply of grocery goods. This is a reference to a supplier offering preferential terms to one buyer over another even though the transactions involved are equivalent in nature.

The legislation outlined above provides for the investigation of a breach by the Competition Authority and for prosecution on indictment by the Director of Public Prosecutions, which the Deputy will be aware are both independent bodies in the exercise of their statutory functions. Alternatively, aggrieved suppliers may take a private action for relief by way of injunction, declaration or damages including exemplary damages. Depending on the specific details of any individual case the EU Commission may also have a role.

With regard to the practices referred to in the Deputy's question, there may be jurisdictional considerations given that the practices may have a cross border dimension. I would urge the Deputy to bring any details of the practices concerned to the attention of the Competition Authority in order that the relevant competition body can be identified to follow up on the matter and to investigate if the said practices are in conformity with the provisions of competition law.

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