Restrictive Practices (Confirmation of Order) Bill, 1987: Committee Stage.

Tuesday, 10 November 1987

Dáil Eireann Debate
Vol. 375 No. 1

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Question proposed: “That section 1 stand part of the Bill.”

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  This section provides for the confirmation of an order. Before the section can be agreed the House must be satisfied with the terms of the order. I have a number of problems with regard to the terminology of the order. I realise that it is not possible to amend the order but it is important that the House and the public should understand exactly what the order means.

My first problem is with the definition section of the order where some of the definitions are curious, to say the least. According to this, grocery goods are defined as grocery goods for human consumption excluding fresh fish, etc. A definition that says black means black is not a definition of black. A definition of “grocery goods” which says grocery goods mean grocery goods is not a definition of grocery goods. It does not provide any information as to what are grocery goods. The order goes on to say that grocery goods mean grocery goods ordinarily sold in grocery shops. As grocery goods have not been defined in the first place, as grocery has not been defined, there is no guidance as to what grocery [152] shops are either. Will the Minister explain what this definition means?

The definition of “generic” says “generic or other similar description.” That is the definition of generic. What does that mean? Is that a definition? Seasonal goods are defined as “Christmas cakes, Easter eggs or Hallowe'en bracks”. There are plenty of other seasonal goods that do not come within the confines of Christmas cakes, Easter eggs or Hallowe'en bracks. Is plum pudding a Christmas cake?

Mr. S. Brennan: Information on Seamus Brennan  Zoom on Seamus Brennan  Election hats.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Is Easter confectionery, for instance, in the form of chocolate bunny rabbits to be called Easter eggs within the terms of “seasonal goods”. If one is selling Easter rabbits, there is not much point in selling them after Easter, but according to this they may well be excluded from the definition.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  They may not be made of chocolate either.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  I recognise that using rather homely descriptions makes this sound amusing but in practice considerable difficulties could arise. This will mean that people will understock seasonal goods that are not either Christmas cakes, Easter eggs or Hallowe'en bracks, because there is no point in being left with stock on hands for the whole of the Christmas holidays. If plum puddings are stocked in a supermarket and they find that they have plum puddings on their shelves on Christmas Eve, they have to get rid of them and the way they get rid of them at the moment is by marking them down substantially. There is no point in hanging onto them until the supermarket reopens in January because nobody will be interested in the goods that are specific to the Christmas season when the Christmas season is over.

Clearly this applies also to the general category of what might be called “festive goods” that are not related to a particular festival, for example, Christmas crackers. Obviously there will be a much bigger [153] sale of those before Christmas than after Christmas. One might say that shopkeepers should be able to sell them after Christmas because there will be other parties going on. Even though that might be true, if people have ordered too many of them they will not be able to afford to keep them in stock for three or four months waiting for them to be disposed of. They do not stock crackers as part of their normal trade but for the Christmas season only and perhaps for a few weeks before Easter.

What are the shopkeepers to do? They will not be able to give the crackers back to the suppliers. They will have to sell them below cost to get rid of them. Because this Bill excludes all goods except Christmas cakes, Easter eggs and Hallowe'en bracks from the definition of seasonal goods shopkeepers will not be able to sell off goods such as Christmas crackers below cost. I do not see how that definition will be workable. It will lead to shortages of these goods. People will understock seasonal goods for fear of being left with excess stock on their hands. If they sell them off below cost during the last day or two before the feast in order to get rid of them they will break the law. This narrow definition of seasonal goods could lead to shortages of these goods.

I have trouble also with paragraph 11 (2) of the order which states:

Where a sale is effected to a purchaser of two or more items at a price which is less than the amount which he would have to pay to the retailer concerned if the items were bought from him singly, then, for the purposes of paragraph (1) of this Article, the price of each item shall be the amount obtained by dividing the amount paid by the number of items.

Paragraph (1) relates to the ban on below cost selling. I do not understand the meaning of paragraph 11 (2). Does it mean that no quantity discounts can be granted? If the price has to be the number divided by the denominator — which presumably is the price that would be [154] charged for a single item — then that subparagraph, and I may have misunderstood it, seems to bar quantity discounts altogether. I do not think it would be the intention to bar quantity discounts because they are a normal part of trade. Could the Minister explain the meaning of paragraph 11 (2)? What is it about?

I have problems also with the definition of “net invoice price”. I could not find a definition of this in my reading of the order and perhaps the Minister could guide me as to where I should look for the term “net invoice price”. Apart from that, it may be that paragraph 2 (2) of the order is the definition and if that is so, I can be reassured.

During the debate I said I had a problem with this section but the Minister did not deal with it in the course of his reply. This order could lead to a diversion towards imports in the grocery trade in Ireland. Let me explain why. As I understand it, the net invoice price is the price written down by the supplier in a register as to what is the official price he is charging which he has to keep for inspection and of which he has to supply details to the examiner. The “net invoice price” is the official price and goods may not be advertised or sold below that price. From my reading of the Bill and from what the Minister said essentially that is what it means. However, I see a problem here.

If a person has a chain of supermarkets, and there are such, with branches on both the north side and south side of the Border, he is able to buy goods in the North for an outlet in Northern Ireland. After buying the goods he is then able to put them in an outlet in Ballymun. The goods can be sold off at a price which may appear to a competitor supplier in the South to be below his cost. He can complain to the Examiner of Restrictive Practices that imported goods being sold by this outlet in Ballymun are in his view being sold below cost. How can the Minister find out what the cost is? In this case, the net invoice price will be the price charged by the Supermarket Company, Northern Ireland Limited to the Supermarket Company, Republic of Ireland Limited. They can put down any price [155] they like. How will the Minister be able to go behind that? He will not be able to inspect the books in Northern Ireland and he will not be able to inspect the books of the supply company in Northern Ireland because they are both outside his jurisdiction.

There is going to be problem in this regard. Many supermarkets may sell below cost and when it comes to choice customers might prefer to deal with a supermarket which competes on price rather than with a supermarket which competes by means of rip-offs in the form of competitions, draws, and trips where nobody knows what the chances are of success or how much extra they are paying on their groceries in order to qualify for these free draws, trips and so on. Consumers may prefer to buy from supermarkets which give them a lower price.

Many people may attempt to continue with below cost selling and it would appear, from reading the order, that in order to do that, all they will have to do is buy the goods from their company operating outside the jurisdiction. If they do that the invoice can say anything they like and the Examiner of Restrictive Practices will not be able to go behind it because the original transaction, buying from the supplier, will have taken place outside the jurisdiction where the examiner will have no investigative power. Therefore, this below cost selling ban could lead to a flood of imports and jobs will be lost and not saved in the food industry.

I am not, as the Minister said during his Second Stage speech, objecting on principle to below cost selling; principles do not come into it. What I am concerned about is the effect of this in practice. If the effect of it is to increase imports, I do not really mind about the principle as to whether there should or should not be below cost selling in some ideal world. This is the real world and it would have the effect of encouraging imports. Perhaps the Minister would address himself to this question.

[156] Paragraph 12 of the order bans below cost advertising and it states:

... a retailer, wholesaler or other person acting on behalf of a retailer, shall not publish or display, or cause to be published or displayed, an advertisement for the sale of grocery goods—

which by the way are not defined,

—at a price that is less than whichever of the following is applicable...

which essentially is below cost. It goes on to say:

Paragraph (1) of this article shall apply in relation to an advertisement whether or not it contains an indication of the price of the goods to which it relates...

I do not know how you could advertise that something is being sold below cost without saying the price at which it is being sold. What is subparagraph (2) about? It is saying that it shall be illegal to advertise something below cost at a particular price and that will apply whether or not the price is indicated. It is confusing to say the least.

There is another curiosity here and I do not know if it is actually a loophole in the legislation which could lead to a flood of business into own brand goods and this is contained in paragraph 13 (1) (c) of the order. Paragraph 13 relates to the obligation on suppliers of goods or manufacturers to prepare and maintain a statement in writing prescribing the terms and conditions upon which the grocery goods are being sold. A key to the enforcement of this order is that without the list you are not going to be able to enforce it. Paragraph (c) states that the requirement:

Does not apply to the sale of goods that have been processed, blended, canned, packed or otherwise prepared in accordance with the specification and requirements of the purchaser, and, for the purposes of resale, are not given the name or a brand name of the purchaser.

[157] I do not understand that. What is that all about? How would there be a situation in which a purchaser would give specifications for goods but not put his own brand on them? What type of situation is this concerned with? Is there any danger that this could be construed as not requiring a list to be kept in respect of own brand goods.

I have another problem with regard to paragraph 15 of the order. This is where we will have essentially subjective law making by the examiner without any recourse to this House or to objective standards. I do not believe it is appropriate that the subjective judgment on a commercial matter of a functionary should have the possible effect of making somebody guilty of a criminal offence. It is important for the rule of law, which is one of the essential underlying basics of civilisation which distinguishes countries of western Europe and North America from others, that people should be at risk to their freedom or to forfeit of goods or whatever only on the basis of commonly understood and well established rules that anyone can read and know before doing a particular thing.

Paragraph 15 — and I do not want to exaggerate it — flies in the face of the basic underlying principles that constitute the rule of law, prior objective and comprehensible rules. Paragraph 15 states:

If the Examiner is satisfied that the operation by a supplier of the terms and conditions contained in the statement... constitutes unfair discrimination in favour of any or against any wholesaler or retailer or any section of the grocery trade comprising the business carried on by wholesalers and retailers, the supplier shall, at the request of the Examiner, make such amendements to the terms and conditions aforesaid as may be specified by the Examiner being amendments calculated to eliminate the alleged unfair discrimination.

If the examiner thinks on his own authority that something is unfair he can say “stop” and if you do not stop he can prosecute. What criteria are there to [158] guide him — that little word “unfair”. What is unfair as far as I am concerned might be entirely fair as far as Deputy Yates is concerned. What is unfair as far as the Minister of State is concerned might be quite fair as far as Deputy Gibbons is concerned. Unfairness is the quintessential subjective matter. It means what you think it means. It means what you say it means and it could mean something entirely different to somebody else.

Here we have a situation in which the examiner will be able to say: “Stop, it is unfair”, blow the whistle and put you in jail if you do not agree. I do not believe that is fair. It is our job to decide what is fair, not the examiner's. We the legislators make the rules, not some delegated person.

It is not unreasonable to advance the excuse which the Minister may do. If the examiner is going to take any sanction in this matter he will have to go before a court and take a prosecution against somebody for not abiding by his instructions about the terms in which they supplied certain goods. If we rely on the courts, the courts will be deciding what is fair and unfair in commerce. The courts can decide about facts; they can decide what the law means, but it is certainly not the function of the courts to decide what is fair business and what is unfair business.

That is the responsibility of this House and it seems we are failing to fulfill our responsibility in this matter. The House is being asked to give Carte blanche to the Examiner of Restrictive Practices, the worthy person that he may be, to blow the whistle on some transactions and let other through all on the basis of his interpretation, his own subjective interpretation of the little word “unfair” which can mean what anyone wants it to mean. That is not good law. This House and the Minister should say what constitutes unfair discrimination not in terms of unfair discrimination meaning unfair discrimination like our definition of “groceries” earlier where we said that groceries means groceries. This House must decide what is “unfair” and what is “fair” to give some guidance to the examiner so that [159] we do not get a breach of the principle of the rule of law in this area.

My final point, and I have touched on it already but I wish to make it separately on Committee Stage, is that I am worried that once we have got into the area of regulation we will be swamped by it. I acknowledge that we are in it already as there is a ban on below-cost advertising and this is just a further development. It is like going into a swamp. The more you step into it the further you have to step into it. You keep getting deeper and deeper into the swamp of regulation and before too long you do not know where you are yourself. I think what will happen is that we will have a ban on below-cost selling and there will be no below-cost selling except below-cost selling of imports. In my view this will mean we will have more imports but we leave that aside for the moment. What will happen? The three or four supermarket groups who are competing for market share will not be able to sell below market cost and will ask what will they do. Perhaps they might offer a free holiday in Miami to customers who buy from their shops. The supermarkets will not say that you have one chance in 45,000 of qualifying for this free holiday in Miami or they will not tell you about the type of accommodation or anything like that. However, they will offer a free holiday in Miami. That sort of advertising by competitors is completely opaque. Nobody knows the value of the prizes in the competition they are participating in. Because we are banning below-cost selling, I think there will be a massive shift of marketing resources into all these other gimmicks rather than below-cost selling. I predict that the Minister for Industry and Commerce, whoever he or she may be in 12 months time, will be coming to the Dáil with an order on the lines of “the restrictive practices regulation of promotional activities order” which will state that nobody shall advertise free holidays unless the holiday is up to a certain standard and the proportional chances of winning the holiday are known. When that order is implemented a way will be found [160] around it and a new quiz will be thought up by the supermarket retailers to win market share which will then have to be regulated. It will be like stepping into a swamp — the further you go in the harder it is to get out. I am worried as this is not necessarily the course on which we should be travelling.

Mr. Yates: Information on Ivan Yates  Zoom on Ivan Yates  I am sorry I was not in the House earlier but I understand the Minister referred to some of the other Second Stage contributions. Before dealing with Committee Stage, I would like to assure the Minister that the relationship between Deputy Bruton and myself is more than cordial and amicable. He need have no reason for distress. I only hope that relations between himself and the Minister of State are on the same basis.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I was only speculating.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  This is a love-in.

Mr. S. Brennan: Information on Seamus Brennan  Zoom on Seamus Brennan  Can we all play this game?

Mr. Yates: Information on Ivan Yates  Zoom on Ivan Yates  I would like to raise the following issues on Committee Stage. My big fear is that people will find a way around this order by collusion. I ask the Minister what steps he feels can be taken or are being taken to deal with the situation whereby the supplier, let us say a baker, is a relative of the purchasing manager of one of the large multiple stores and a question arises as to the doctoring of certain invoices? If you base the price entirely on the bona fides of the net invoice price you may well have collusion as to what is the invoice price; in other words, the price on the invoice may well be below cost in itself. The regulations could be got around in this way.

I do not have any fears about the legal implementation of the order because it is quite clear from the High Court rulings and case law to date that net invoice price plus relevant taxes is an acceptable rule of thumb legally and prosecutions have been obtained on that basis. I have no doubt that would stand up in law. Deputy [161] Bruton's three amendments are all very sensible.

Acting Chairman (Mr. Hilliard): Information on Colm M. Hilliard  Zoom on Colm M. Hilliard  The amendments are not accepted.

Mr. Yates: Information on Ivan Yates  Zoom on Ivan Yates  On what grounds?

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  I got a rather brief letter from the Ceann Comhairle about an hour and a half ago telling me that the amendments were out of order.

Acting Chairman:  For the record, the amendments were ruled out of order, as being not relevant to any provisions of the Bill.

Mr. Yates: Information on Ivan Yates  Zoom on Ivan Yates  I know it is not in order to question the ruling of the Chair but the ruling strikes me as rather remarkable. The Minister can make provision for trial and error and to review the situation after one year. I think the Minister has agreed to do this.

I understand Deputy Bruton referred to seasonal goods also at Second Stage. In drafting my own Bill I had detailed discussions with a former Examiner of Restrictive Practices, Mr. Austin Kennan, who had quite a degree of expertise in this area. As I understand for the purpose of the advertising ban there had been a classification for groceries. I had some of these discussions some time ago and my recollection is somewhat opaque. It strikes me that a reasonable intention would be that perishable goods that would become rotten, for example, fruit, yoghurt would be one category of exemption and another category would be for articles with a different retail price after a certain event. Christmas cards and many other seasonal items would not come under the heading of groceries, and therefore the particular definition used by Deputy Bruton, “goods whose sale is substantially greater at Christmas, Easter or in a particular season” strikes me as a rather sensible approach. The condition could be made stronger by saying that the sale should be almost solely dependent on the season. It depends on the particular language you use. I would favour the [162] adoption of the principle of exempting perishable goods after the “best before” date has been exhausted, and that seasonal goods also be included.

I would be very interested to hear the Minister's response to Deputy Bruton's points on imports. It is a matter of deep concern that imports should not be given a more advantageous position as a result of this order. In fact, as I argued on Second Stage one of the arguments put forward by the Confederation of Irish Industry in favour of this measure was that UK companies which had a production outlet in Ireland found they were getting so much hassle from the big buyers that they closed their Irish outlets and ensured that negotiations would take place with their head office which would be on a more equal footing. It was clearly outlined to me in the case of one particular product, margarine, that unless there was some control on below-cost selling the sector would be in severe trouble.

The legal way to deal with this problem is by the mechanism of landed price. There is a precedent in this regard, although it may not be the correct analogy to use. During the change of the excise duties on motor cars there was a definition of landed price and to get over the problems of imports into the North and South, the landed price is the net invoice price of the goods as they are landed in Ireland or in the particular store and an invoice would have to be provided at that stage.

I would like the Minister to outline the position on multiple purchases of goods, for example where butter, sugar and other different items are on the one invoice. It could be possible to get around the legislation if it is not watertight in that area.

As the Minister and Deputy Bruton have said, in relation to the one year scenario, what we should do is to give a signal to the retail trade that we are not satisfied that it is in the interests of consumers or manufacturers that increasing power should fall into fewer hands, in terms of a multi-billion pound industry. [163] No other European country has allowed that to happen. We should seek to ensure that it does not happen, that a few people are not allowed to operate a cartel. We should not allow a situation to develop where there would be no regulations in relation to marketing tactics and whereby all sorts of different loss leader concepts could mislead the public. As I said earlier, surveys show that consumers remember only the detailed prices of a very limited range of products and that, therefore, if they are sold very cheaply a misleading impression of value can be created. For that reason I think the amendments put down by Deputy Bruton are reasonable and, in conjunction with the Minister's previous commitment to have a one year review of the matter, we should proceed on that basis.

I would like the Minister to specifically respond on the point of collusion. People who are dealing with competitors have written to me about this matter. For example, the bakery industry are trying to supply different multiples and with the advent of this legislation there has been discussion within the trade. There is a strong suggestion of collusion, that, for instance, there will be phoney invoices. I would like to know what steps can be taken either by the Minister or the examiner to deal with such collusion.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  In regard to the question of collusion, I would be grateful for any evidence the Deputy has in his possession which will help us to ensure that this order is not circumvented and that all possible action can be taken. Let us take the importation of goods. Under the 1972 Act the examiner has the power to get all documentation relevant to the transaction. If, after both Houses of the Oireachtas pass this legislation, it comes to the notice of the examiner that, for instance, an importer is selling goods at a price lower than he was selling them a month or two months previously and if he goes to the importer and demands this information and if the information does not satisfy the examiner the onus of proof will then be on the importer. All the [164] examiner has to do is to examine the invoice from a month earlier which states that the price of an article was £10 whereas the importer is now stating that the article is £6 or £8. That invoice can be taken by the examiner and produced in court as the invoice price and the court can accept it unless the importer can prove otherwise. I have no doubt that efforts will be made to try to circumvent this order.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Can the Minister say what section relates to the onus of proof?

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I will give the Deputy that information in a moment. In relation to other points made, a review will be carried out and any areas that can be improved will be considered. As all Deputies know, it is impossible to bring in an order or legislation to cover every possible eventuality. We could end up with one act which would forbid everything incorrect from taking place and that Act might or might not be perfect.

The article the Deputy was inquiring about is article 19. Deputy Yates referred to the net invoice price as already defined in court by Justice Butler. Its definition is well known and well accepted in the trade but if anybody wishes me to spell it out in more detail I will do so. Many of the definitions in this order are the same as those used in the 1981 order under which prosecutions have been made. The best test of law is to take it to court. Many of the definitions have been tested in this way. There have been successful prosecutions. I am not satisfied that the definitions are not adequate. They have proved adequate by the test of time.

Some people talked about excluding other items from this order. If a retailer buys seasonal goods and realises towards the end of the season that he has an oversupply, the judgement of the buyer must first be taken into consideration. No doubt in the following year, he will make corrections if his judgement has been faulty. That person can always clear the goods at cost price which would be a considerable reduction on the price at which he would normally sell them. That [165] would be the sensible thing to do. This order bans below cost selling only. It does not ban selling goods at cost price.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  What is the position if the goods are already being sold at cost price?

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  The order does not ban selling goods at cost, it bans below cost selling so there is an opportunity for people to run their businesses and clear their shelves. That is normal in any business. There were two malpractices in operation, one was “hello-money” and the other was below cost selling. “Hellomoney” was money which was being extracted from suppliers, under the abuse of power of buyers in a certain position to demand it, to get their goods on the shelf or for various other reasons. I do not think anybody in this House objects to the banning of “hello-money”. We do not accept that it is part and parcel of running a business in Ireland today and we are not prepared to tolerate it.

Below cost selling was represented for quite a long time in this country as a benefit to the consumer. Multiples use a certain number of loss leader products but the discount they are giving on those items is made up on a whole range of other items. Different surveys have shown that and housewives can prove it. In reality there is no such thing as real benefit to the consumer unless he goes into a specific supermarket or multiple, buys half a dozen items which are loss leaders, continues to the next supermarket and does the same thing. Not many people have the time or the money to do that. Selling goods below cost is a marketing ploy to convince consumers that it is in their interests when in fact it is not because there is no such thing as a free lunch, somebody has to pay for it. It was not in the interests of the consumer but in the interests of the multiple to try to get a larger market share. Anybody who studies the corporate strategy of huge organisations will realise that they get a larger share of the market and eventually when they control the whole [166] operation they rise their prices. Multinational companies may be prepared to lose money for five, ten or 15 years knowing that at the end of the day they will recoup the loss very fast.

We want to restore a level playing pitch to give everybody a reasonable chance. Like Deputy Bruton, I hate interfering with the market. Competition will always produce the best value for the consumer at the end of the day provided certain buyers do not abuse the system. I do not like interfering with the market, but where there are abuses it is our duty as legislators to do all we can to stamp them out. The definitions are there in the 1981 order. They have been brought before the courts and have been found to stand up and that is the best test in relation to law.

I referred to the way that we have tried to stamp out collusion and the order will be reviewed in 12 months time. In relation to seasonal items, they can be cleared at cost. This is a fair and reasonable attempt to attack the problems that are there. The people out there in the market place have been crying out for this for a long time. The sooner we get it out of this House and into the Seanad and into law the better for everybody concerned.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  The Minister has made a Second Stage speech just now on the principle of the thing, which we are not fighting about.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I have tried to keep it simple. Does the Deputy want to get legalistic?

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  I want to find out what the order means. I want to ask first about the definition of “generic.”

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  “Generic” means own brand. Everybody in the trade knows what “generic” is. Deputy Yates will tell the Deputy. He knows.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  I will just read the sentence. Paragraph 1 says:

[167] In this Order “generic” or other similar description.

What does that mean? That is the so-called definition.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Does the Deputy know what “generic” means? It means own brand goods. Everybody in the trade knows what it means. Deputy Yates is smiling; he knows what it means.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  The Minister should not get irritated. There is a legitimate parliamentary function to be performed here, that is, to find out what terms mean?

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  How can the Deputy say he does not understand it when he is in here reading definitions that refer to the trade. I know Deputy Yates understands it, and I am satisfied that what is there is what will stand up in court.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  We are not talking about fault but what things mean. I do not understand in article 2——

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  What the Deputy is asking about is not a definition but only part of a continuing overall definition.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  It says “generic” or other similar description;” and then the next line is “like goods”——

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  The definition reads:

“Like goods” means similar goods which do not differ one from another as regards their nature, grade, brand, quantity per pack or packaging,——

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  What is the relationship between “generic” and that?

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I beg your pardon?

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  What is the difference between the definition of “generic” and the definition of “like goods”?

[168]Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  It is part of the definition of “generic”.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  It is not. There is a semicolon between the two of them. It could not mean that.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  It is part of the continuing definition of grocery goods.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Let us read it as a full definition.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  If the Deputy cannot understand that, I cannot help him.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  There is no need or justification to use these dismissive gestures to deal with a legitimate question, and bluff and bluster will not bring the Minister any distance.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Go on.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Yes, I will:

“generic” or other similar description; “like goods” means similar goods which do not differ one from another as regards their nature, grade, brand, quantity per pack or packaging.

What is the connection there between “generic” and the definition of “like goods” and what does the definition of “generic” mean?

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Start at “grocery goods” and maybe it is easier to understand.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  It reads:

“Grocery goods” means grocery goods ... as are ordinarily sold in grocery shops and includes grocery goods designated as “own label”, “generic” or other similar description; “like goods” means——

that is a new sentence——

“like goods” means similar goods which do not differ one from another as regards their nature, grade, brand, quantity per pack or packaging,

[169]Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I think all the Deputy is doing is mistaking a comma for a full stop.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  I am not. I have the order in front of me.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  The comma is after “own label”.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  I am not concerned with that comma at all. I am concerned with what is the definition of “generic” that the Minister is using. If there is not an adequate definition the courts cannot interpret it. I also am concerned, since the Minister has referred to it, with what is the definition of grocery goods. It is important to know what that definition is to determine what is the scope of this order because it applies to grocery goods. I take it that we are agreed that that is what it applies to. The order tells us that “grocery goods” means grocery goods which are sold in grocery shops. Now what are grocery shops? What does grocery mean within the terms of this order? Does it apply, for example, to Christmas crackers; are they considered to be grocery goods? Does it apply to lawnmowers sold in a supermarket? Does it apply to picture frames sold in a supermarket? Are they grocery goods?

An Leas-Cheann Comhairle: Information on James C. Tunney  Zoom on James C. Tunney  Could the Deputy just briefly repeat the question?

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  I essentially wanted to know how the definition of “grocery goods” can stand up considering that “grocery goods” is defined as grocery goods.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  The definition “grocery goods” has been included in the 1981 order and has stood up to many prosecutions in court. In relation to the other problem, “grocery goods”— and I will read the whole thing through very slowly—

“grocery goods” means grocery goods for human consumption (excluding fresh fruit, fresh vegetables, fresh and [170] frozen meat, fresh fish, frozen fish which has undergone no processing other than freezing with or without the addition of preservatives and intoxicating liquors not for consumption on the premises and such household necessaries (other than foodstuffs) as are ordinarily sold in grocery shops, and include grocery goods designated as “own label”, “generic” or other descriptions;

There is no full stop after “own label”. What is being done here is that for the first time generic or own brand products are being brought in; intoxicating liquor which was also outside previous orders is being brought in under this order. That is all. I hope that helps the Deputy.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  I thank the Minister very much. I did not wish to be unpleasant. I merely wished to find out what the thing means and that is my legitimate function here.

I am concerned still about this definition in the sense that it refers to grocery goods as goods for human consumption, which I take it, is food, and such household necessaries other than foodstuffs as are ordinarily sold in grocery shops. Now as grocery shops are not defined anywhere in the order, and household necesssaries are not defined either, I do not think we have a clear definition of grocery goods. What is the scope of the order? That is essentially what this is all about. How wide does it go?

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  How could one ever list them all? To be helpful about it, this is not a new definition introduced in this order. This definition has been in the 1981 order and has been tested. It has been through the courts. Prosecutions have been successfully laid. That is not a new definition that has been introduced today. It is one that is ongoing.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  It is important to determine this. Certainly if prosecutions have been taken in regard to food, for example, there is no doubt that food comes within this because grocery goods [171] for human consumption other than fresh fruit are specifically defined. That is fine. The fact that a prosecution was successful on that point does not mean that the rest of the definition is satisfactory because there was no argument about whether the order applied to that or not. Let us take the example of picture frames or Christmas cards. Are they household necessaries? Does the order apply to them? It is important to know to what does the ban on below cost selling apply.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  These products are not likely to be ones involved in below cost selling by the grocery trade.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  That is a very pragmatic answer from the Minister, but in law one is not pragmatic, one is making law that would have to apply in all circumstances, not just the circumstances which the man of goodwill intends.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  This definition has gone through the law and the courts.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  I think the Minister will agree that there has only been a relatively small number of prosecutions. I have no doubt that those have not tested every aspect of this definition. What I want to know — and it is a very simple question — what does the below-cost selling ban apply to other than food?

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  It applies to what is listed there.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  Which is such household necessities other than food ordinarily sold in grocery shops. That could mean anything. Grocery shops sell things from a needle to an anchor from time to time. The Minister will be well aware from his visits to the west of Ireland——

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I do not see needles causing any problems in the commercial trade around the country.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  The Minister will be [172] aware from his travels around the west that if he goes to a grocery shop he will see brushes hanging from the ceiling——

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Coffins.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  ——cement bags in the corner and all sorts of things being sold there. Cement could be a household necessity if one wanted to do something to secure the house from falling down. All I want to know is what the below-cost ban applies to. This definition does not tell me.

Mr. Yates: Information on Ivan Yates  Zoom on Ivan Yates  As I understand it, under the 1981 Ban on Advertising Order, a series of definitions was set out in respect of grocery goods. It would be helpful if the Minister would outline that list.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  What list?

Mr. Yates: Information on Ivan Yates  Zoom on Ivan Yates  It is set out quite clearly. There is a point which is very relevant. What did not stand up in the courts in relation to the ban on advertising, and which overturned the whole thing, was that for the particular advertisement, to be an offence against the order banning below-cost advertising, one had to specify on the advertisement that it was advertising goods below cost and this was not done. I should like a comment from the Minister on this. It is a point on which he cannot rely on the 1981 order. That is the basis on which the judge overturned, or found a loophole in, the advertising ban. As I understand it, the advertisement did not specifically state that it was selling biscuits, sugar and butter deliberately below cost. If it did not specify it, then the case was defective. Is that matter now rectified in this legislation?

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  To which case is the Deputy referring?

Mr. Yates: Information on Ivan Yates  Zoom on Ivan Yates  I think it is the one heard by Justice Lardner, but I am not sure. It was the case which proved the advertising ban to be defective.

[173]Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  That was the Lardner case. I quote:

See paragraph 12. This paragraph is similar to paragraph 12 of the 1981 Order. The effect of this paragraph was to prohibit the advertising of grocery goods below the net cost including VAT plus where appropriate, any charge such as insurance changes not included in the Invoice.

There are some drafting changes which are necessary to overcome a High Court decision by Justice Lardner on the 1981 order. He held that for an offence to be committed under the 1981 wording, the advertisement had to carry an indication that the price being charged was below cost as well as indicating the price of the product.

Rather than produce an order which listed every single item — and common sense would dictate that you cannot possibly go through every single item — there was a move to a general definition. What length would an order be to include every single item to be sold in a grocery shop? With regard to the sale of coffins, as I have seen them being sold in grocery shops, there is no great worry in this House that people would be getting bargains at below cost in coffins. You must have a general definition. If you want to take the extreme in the west of Ireland, there everything would be sold, but I do not think that anybody would go that far.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  It is important that the House should know the scope of the order. A definition which says that grocery goods shall include household necessities sold in grocery shops really provides an inadequate guide. I am not asking the Minister to give a long list. I recognise that he could not amend this order at this stage even if he wanted to, but he should consider very seriously whether this definition is clear enough.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  The wording here is “ordinarily sold in grocery shops.” The key words are “ordinarily sold”. That is what the definition is based on. That is normal enough. The order cannot be [174] changed at this stage. We shall have a review in 12 months' time and let us see what comes out of that review. Basically, what we are trying to do is to attack two major problems, one of below-cost selling and another of “hello-money”. That is the major purpose behind this legislation. If people try to find loopholes between now and next year we shall consider these matters. They might think about advertising in the publications of multiple stores, but I want to sound a note of warning. That does not get around this legislation. There may be various other supposed loopholes. People will try to circumvent the order but the review next year will, it is hoped, take care of whatever comes up in the intervening period.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  My worry is not that people will drive a coach and four through the order but that they will not know whether the order applies to them or not. Therefore, it will have the effect of making commerce uncertain and difficult to conduct. I want to raise also the question of the limitation of the definition of seasonal to Christmas goods, Easter eggs and Hallowe'en bracks. That is a very limited definition. There obviously will be other goods which are seasonal and Deputy Yates, I think, mentioned the best example of all, which is Christmas cards. There is absolutely no point in sending Christmas cards after Christmas.

Mr. Keating: Information on Michael Keating  Zoom on Michael Keating  Some politicans do.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Politicians get them cheap for the following year.

Mr. Keating: Information on Michael Keating  Zoom on Michael Keating  By the ton.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  So long as they are confident they will be politicans at the following Christmas.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Do not worry about that.

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  In the real world, people stocking substantial quantities of a whole range of seasonal goods will be [175] disappointed that the order does not contain a wider list than this. The definition I was proposing, referring to any goods sold in larger quantities in a particular season, might to be too wide. However, the Minister should list a fairly large number of these commodities, not just the three listed here.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  If somebody buys too many Christmas cards, what is the point of having a sale after Christmas at below cost? Who will buy them anyway?

Mr. J. Bruton: Information on John Bruton  Zoom on John Bruton  It is before Christmas I am talking about.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  The reality is that if the supplier has not his Christmas cards sold by Christmas Eve, he puts them away for the following year. They are not perishable and do not disintegrate, although the designs might change. What do you do about that situation? I know the Deputy is making the point that one should extend the list, but if one keeps on extending the list the order becomes totally useless. We have taken the fairest approach to the two major problems of below-cost selling and “hello-money” and there will be a review in 12 months' time. No changes can be made in the order now, but we shall see in the meantime how it operates and if improvements are needed. It is hoped that the trade will get into an ordinary way of running business, not making it necessary for this House time and time again to interfere in the marketplace. That is not my desire and I am sure it is not Deputy Bruton's desire either. Let us hope the trade gets on with the business and a fair level of trading is restored to give everybody a chance to make a living.

Mr. Keating: Information on Michael Keating  Zoom on Michael Keating  We have been talking about the definition of grocery goods. There is a reference that it is to include, for example, like goods, meaning similar goods which will not differ one from another as regards their nature, grade, [176] brand, quantity for packing and packaging. I am trying to consider the practicable arrangements for making an evaluation, say, between sliced pans, or loaves of bread, or packages of rashers, all of which have different qualities, different ingredients perhaps and so on. How will the order be effective in adjudicating on cost there? I cannot see how the grouping of a whole array of such goods will be a practicable way of implementing the order. What does the Minister feel about that? To me, like goods is an almost meaningless phrase in terms of effectiveness.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  Own brands of generic products have been outside the scope of any order up to now and have been brought in now. The fear was that if below-cost selling were banned on the range of branded goods, the stores' attention would come to own brands or generic products as defined here. For the first time, both own brands or generic goods and intoxicating liquor are being brought under the order. The definition of cost as already defined by Justice Butler has been accepted in the trade since 1981.

Progress reported; Committee to sit again.


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