I move: "That the Bill be now read a Second Time."
The purpose of this Bill is to confirm an order which was made by the Minister for Industry and Commerce under the Restrictive Practices Act, 1972. The order was made on the recommendation of the Restrictive Practices Commission which was contained in their report of a special review carried out into the supply and distribution of motor spirits. The report and order were presented to both Houses of the Oireachtas on 18th June, 1975.
A public inquiry was held by the Restrictive Practices Commission into the supply and distribution of motor spirit in 1970. The inquiry was held at the request of the Minister for Industry and Commerce following representations made to him by the Society of the Irish Motor Industry that the growth in the number of motor spirit retail outlets should be curbed.
In the report of the inquiry the Restrictive Practices Commission said that the number of company-owned outlets had been increasing unduly and the percentage of total sales of motor spirit through these outlets had increased substantially. The commission felt that if this trend was to continue unchecked the petrol companies would gain substantial control over retail distribution. Such control would be likely to reduce competition, facilitate restrictive practices such as market sharing and price fixing, and extend the economic power of the multi-national oil companies.
The Restrictive Practices Commission recommended, inter alia, that petrol companies should not open any new company-owned retail outlets for a period of three years. The Minister for Industry and Commerce accepted the recommendation of the Restrictive Practices Commission and on the 15th June, 1972 made the Restrictive Trade Practices (Motor Spirit) Order, 1972. Article 3 of that order prohibits oil companies from opening new company-owned petrol stations for three years ending on the 18th July, 1975. However, there were three exceptions to the prohibition. The first exception was a transitional one applied to certain retail stations which were under construction when the 1972 order was made. The other two allowed a company-owned retail outlet to be opened within a mile of one which had closed down (a) because of compulsory purchase by a local authority or (b) because of loss of trade, due to road diversion. The Minister undertook at the time to ask the Restrictive Practices Commission to review the operation of the prohibition before it expired on the completion of its three year period of application.
The Restrictive Practices Commission carried out the review last March. The review took the form of a series of private hearings which were attended by representatives of seven oil companies, the Society of the Irish Motor Industry and the Irish Petrol Retailers' Association. The report of this review now shows that the order had been reasonably effective. Although the number of independent outlets continued to decrease in 1974, the number of company-owned outlets which had previously been increasing also decreased. In addition, while sales by independents continued to increase, sales through company-owned outlets, which had increased fairly substantially in previous years, fell in 1974. The commission are satisfied, therefore, that the prohibition is curbing the growth in the number of company-owned stations and in the oil companies' share of retail sales. The commission recognises that the present state of uncertainty in the oil industry makes it unlikely that the oil companies would try to increase the number of company-owned outlets even if the prohibition were lifted. But they feel that this position would not hold good in the event of a return to normal conditions in the oil industry. They consider, therefore, that the prohibition should be extended for a further period.
The oil companies, quite naturally, would not welcome any continuation of the prohibition, but in the present state of the industry they would not be opposed to an extension for a further two years. The petrol retailers, also quite naturally, wanted an extension for as long as possible. The commission felt that the extension should be for a period of three years and they recommended accordingly.
The report also states that a number of oil companies were critical of the "one mile limit" for the replacement of company-owned stations which were closed in circumstances defined in the original order. They suggested that the limit should be increased or removed altogether. The commission pointed out that the purpose of the exceptions was to facilitate a company to retain the business it had in a particular area which it could lose because of traffic diversion resulting from the construction of a new road near its existing outlet or because of the compulsory acquisition of its existing outlet by a local authority. They felt if there was no limit the exceptions might be abused, but bearing in mind the difficulty of acquiring sites within a mile radius and of obtaining planning permission they considered that it would be reasonable to extend the limit from one to three miles and they recommended accordingly.
The Minister in making the order gives effect to the commission's recommendations relating both to the extension of the period of prohibition and the "mile limit".
The commission pointed out in their report that during the hearings witnesses raised matters which had an indirect bearing on the operation of the 1972 order. These included the effect of increasing costs, petrol outlets in new suburbs or satellite towns, the effect of various types of agreements and the significance of promotional schemes and hours of trading. The terms of reference of the review precluded the commission from investigating these matters in detail, but they recognise that they have a bearing on the operation of the order and they consider that they warrant more extensive investigation. They recommended that they should review these matters before the new extended period of prohibition expires, and the Minister has accepted this recommendation.
It has been suggested that the prohibition on the opening of new company-owned outlets could preclude new retail chains from opening up for business in Ireland in competition with the major oil companies which are already dominant in the market. I accept that the continuation of the prohibition could have the effect of preventing the entry of a new competitor to the market, but I would point out that the Minister has the power to revoke or amend the order and would be prepared to do this at any time that it appeared desirable in the interests of promoting competition.
The Restrictive Practices Act, 1972, provides that orders of this kind shall not have effect unless they are confirmed by Act of the Oireachtas. The Bill now before the Dáil is the confirming Bill which is necessary to give the force of law to the order concerned. With a Bill of this kind the order which it is proposed to confirm may not be amended by the Oireachtas but must be accepted or rejected as it stands. The matters with which the order deals have been the subject of a detailed special review by the Restrictive Practices Commission and their report, which was presented to this House, sets out the arguments in favour of adopting the provisions embodied in the order.
I commend the Bill to the House.