Competition (Amendment) Bill 2005 - Second Stage Debate - 13th December 2005

Competition (Amendment) Bill 2005 – Second Stage Debate – 13th December 2005

Mr. Norris: I am grateful to Senator O'Toole for sharing his time with me. I agree with him on the impact that the multinationals have had on bookshops and record shops but such a situation came about a long time ago. Most will remember the local bakeries put out of business by these multiples. I remember how Dunnes Stores screwed its suppliers to the wall with "hello money", exclusive arrangements and by stringing them along by not paying their bills on time. Such is the predatory behaviour of these groups.
I do not necessarily see the removal of the groceries order as favouring competition. I also agree with Senator O'Toole about Eddie Hobbs. His show was very good entertainment but should not set Government policy. It was superficial and pandered to the appetite of the watching public.
We should listen to the likes of Ben Dunne. He may have an axe to grind because of his former intimate involvement with the company but he makes business sense. A few weeks ago he said he did not agree with abolishing the groceries order but that if it had to happen there should be two conditions. First, any below-cost selling should take place throughout a chain of stores, not just at one in Dublin but in Cork, Belfast or wherever they are. Second, it should be for a reasonable period of time, and not just bait to lure gullible shoppers in. The Minister may well respond with the Latin injunction caveat emptor but as we have already set out on a course intended to protect the customer, it does not apply.
On page 2 of his speech the Minister refers to trade representatives and business interests who trenchantly defended the order. Curiously, unless I missed them the Minister does not mention other groups which also trenchantly argued against its abolition. Is the omission because those groups are not business interests but groups with a high standing in society who look after the welfare of the most disadvantaged, such as Combat Poverty, Crosscare and the Society of St. Vincent de Paul?

Mr. Coghlan: They were dismissed.

Mr. Norris: The arguments of these groups should be taken seriously.
I will ask a light question. The Minister talks about expertise being available through one of the largest university systems in the country. As Senator Leyden put it, he should "name and shame" and let us know which university it is. I presume it is UCD.

Mr. Martin: It was Senator Coghlan but we will discuss it later. It was not UCD.

Mr. Norris: Apparently, we have the benefit of the expertise of universities.
The Minister goes on to say the groceries order does not and never has operated as a ban on below-cost selling, which may well be true. He also makes interesting points about the difference between invoice price and cost price, which leads me to the conclusion that the specific practice of below-cost selling should be prohibited. The very phrase is complete nonsense. What reasonable business will sell things below cost? It cannot make money in that way so it is only a bait, a lure.
Something should be done about predatory pricing. The Minister said that during the public consultation process no-one in the trade was prepared to reveal the full extent of such discounts and that this clearly underlined the secretive way in which such discounts operated and the critical way in which they are regarded by the trade. In the absence of that information how did the Minister evaluate the position? Is it not curious and a little worrying that the multiples withheld this information from the public?
The Minister talks about stores like Spar and Centra which are a halfway house between the local shop and the multiples. He then said the report clearly demonstrated that the statistics of ghost-town Britain, showing that 70% of towns in the UK have no local shop, had no basis in fact. Instead, he says, access to groceries in the UK is excellent and nearly 90% of rural households in England live within 4 km of a petrol station, most of which have a convenience store attached.

Bravo. What about people who do not have a car? What about the real poor, not just the middle classes? The Minister should be aware of this because a detailed, sophisticated argument was made by Crosscare, the Society of St. Vincent de Paul and Combat Poverty that people on the most critical margin, the most disadvantaged, would not have their needs met by this easy solution where we say there is a garage forecourt within 4 km of most rural housing.
The Minister then referred to dominant undertakings but he does not spell out what they are. They must be very dominant to be taken into account in this legislation because the Competition Authority has decided that a company at a national level must have more than 35% of the market to be dominant and that a local level a company with a market share of 65% is not dominant. Given that none of the national retailers in Ireland have a market share at a national level in excess of 27% or a local market share of more than 65%, they can do what they like, they are not regarded as dominant. What does dominant mean? If a retailer can have 65% in a certain area, surely common sense suggests this is dominant. On the basis this dominance idea is worked out, Tesco and Dunnes could take up another 40% of the market without becoming dominant. That is daft. Also, there has not been a single case taken against predatory pricing since 1991. We should address this because predatory pricing certainly exists.
Combat Poverty, the Society of St. Vincent de Paul and Crosscare in their submission to the Minister on the groceries order pointed out the planning background, where infrastructural deficits impact disproportionately on poorer people who rely on often inadequate public transport: "We write this submission to signal our belief that repealing the groceries order will have, at best, very little impact on the food-purchasing patterns, and, by extension, the food-consumption habits, of disadvantaged people living in poorly resourced locations where the type of food outlet available determines the availability and cost of food". Here I agree with Senator O'Toole, I would be surprised if these large sums of money make their way back into people's wallets, as suggested by Mr. Hobbs. The report continues: "It has been observed in several domestic studies of the groceries market in Ireland that the larger multiples tend not to enter many regional or other similarly undesirable areas where the catchment market in the surrounding areas is deemed insufficient to justify their entry". In other words, they cherry pick, and some areas of the country will not have one of the large groups, leaving the garage forecourt as the only option for the purchaser.
The agencies go on to state:
For households in areas that are considered undesirable to enter by larger multiples, transport to and from supermarket/multiples – often located in out-of-town sites with poor or no public transport – is often not feasible. They are forced by their circumstances to shop close to their homes, usually in the aforementioned 'symbol' category of retail outlets or the garage forecourt type of outlet where healthy food is more expensive and less available.
This has an impact not just on the domestic economy of the poorest people but also on their dietary habits. The document asserts:
The loss of competitiveness that would most likely arise among independent shop-owners following the repeal of the groceries order could have very detrimental effects as regards accessibility of food for households in poorer and/or rural areas which larger multiples may find less desirable to enter. Thus, the groceries order will not be welfare-improving to wider society if it leads to a reduction in the (already restricted) options currently available for households in low-income and low-density areas.
This is the view of Combat Poverty. It makes the point that the forecourts stock fat enriched foods, the least healthy of all.

Mr. Martin: The garage forecourts have grown with the groceries order. That is the point.

Mr. Norris: The order must be examined but differently from the Minister's approach. I am a discordant voice in this; it is not good for the consumer. If it is, it is good for the middle classes, who are over-represented in this House. We must take into consideration the views of those organisations in our society that seek to protect the most vulnerable. I am not convinced this legislation will do that.