Léim ar aghaidh chuig an bpríomhábhar
Gnáthamharc

JOINT COMMITTEE ON TRANSPORT díospóireacht -
Wednesday, 8 Oct 2008

Fuel Prices: Discussion with Competition Authority.

I welcome Mr. William Prasifka, Mr. Ciarán Quigley, Mr. John Evans and Ms Carol Boate from the Competition Authority. I draw attention to the fact that members of the committee have absolute privilege but this same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against any person outside the House or any official, either by name or in such a way as to make him or her identifiable.

I propose that we now hear a short presentation from Mr. Prasifka, followed by a short question and answer session.

Mr. William Prasifka

I thank the Chairman. Members of the committee have been furnished with a copy of my opening statement, which I do not propose to read in full, but rather to highlight some key points. We welcome the opportunity to appear before the committee and to assist it in its work.

The committee is interested in issues concerning competition in the liquid fuel sector. The Competition Authority has been very proactive in this sector for a number of years and I wish to bring some of that activity to the attention of committee members. It was in the liquid fuel sector, specifically with regard to home heating oil, that the Competition Authority secured its first ever criminal conviction of a cartel before a jury, which was followed by a number of subsequent convictions. The heating oil cartel case was initiated after the Competition Authority received a complaint in 2001. There is still an ongoing case in the home heating oil cartel case, which gives members some indication not only of the effort required in bringing a case but also the time involved between the initiation of a prosecution and its final resolution.

As part of the activity, it was alleged, among other matters, that there was an increase in the margin on the price of home heating oil and that this was effectively agreed to by the distributors in the Galway city and county area. The Competition Authority investigated the matter, undertook searches, took witness summons and received a lot of evidence under oath. This resulted in a file that was prepared for the Director of Public Prosecutions, who recommended a prosecution in 2003. Later in 2003, the DPP decided to prosecute 24 suspects for their involvement in the cartel. To date, in this one cartel alone, there have been 17 convictions and fines imposed of approximately €120,000 in total.

I draw attention to some very important characteristics of this case, which is a classic example of a cartel case. It was very highly organised. Cartel members even appointed one particular person to police the price-fixing regime, namely, Mr. J. P. Lamb, who had previously worked in the industry and was secretary to the cartel. His role included booking hotel rooms for secret meetings of the cartel and policing the illegal pricing agreement to ensure that cartel members adhered to the terms agreed.

With a cartel, the agreement is to fix the price above the competitive level. Therefore, occasionally there would be an incentive for cartel members to cheat on the cartel and take business away from others. If a cartel is to be sustainable and profitable, it must have a mechanism to police enforcement, which gives an indication of how organised this activity can be, and has been, in this country.

Evidence also emerged from the jury trial that members of the cartel, including Corrib Oil, the largest oil company in the cartel, approached non-participants to join the cartel and explained the advantages of membership. Corrib Oil and one of its directors, Mr. Eugene Dalton, were among those convicted for their part in the conspiracy.

It is important to realise that when we prosecute these cartels, we are subject to the rules of criminal procedure and the standards of proof that are required under the criminal process in this country. It is not enough for us to act on suspicion or anecdote. We need hard information before we can invoke our formal powers. It is a high standard but we have found that with the right kind of information and a lot of hard work by our staff members, we can bring cases to a successful conclusion.

I wish to address briefly the issue of retail pricing policies in the petrol fuels area. The Competition Acts prohibit agreements that restrict competition or allow concerted practices, that is, parties who act in a collective manner. However, sometimes the line between normal competitive behaviour and price fixing or concerted practices is difficult to define. For example, there is nothing wrong with parties deciding unilaterally to charge similar prices. This type of parallel pricing can be found in many areas, especially those which share characteristics such as transparent pricing, undifferentiated products and stability of demand, and where the sellers' cost and business structures are the same. As the retail motor fuel sector has many of these features, it is not surprising to find parallel behaviour there.

It is our job as an enforcement agency to make the distinction between parallel behaviour and illegal price fixing or concerted practices. We need evidence to make this distinction, however. We need more than suspicion or speculation but where we have this information, we can use our formal powers to bring enforcement to this area. We have been encouraged by the reception of the courts to the cases that we have pursued in the area of price fixing. In a case which was prosecuted at the beginning of last year, the District Court and the High Court found that price fixing is a serious crime against consumers and a type of activity for which criminal sanctions are appropriate. However, while we are encouraged by the progress we have made to date, we are aware that much work remains.

We commend the authority on the work it has done in regard to the fuel case in County Galway. From what Mr. Prasifka says, the major challenge he faces is the need for hard evidence of price fixing. The co-operation of the public in amassing that evidence is crucial.

In regard to the retail motor fuels sector, is Mr. Prasifka concerned about the large number of filling stations which have closed throughout the country or the fact that motor fuels are now being supplied by a limited number of companies which appear to enjoy somewhat monopolistic arrangements in certain parts of the country? Can action be taken to decrease or increase motor fuel prices in response to changes in oil prices? There seems to be a lengthy delay before pump prices respond to decreasing oil costs.

Can anything further be done in terms of Competition Authority involvement in outing suppliers of motor fuels which consistently keep their prices at the top of the league? I accept that consumer vigilance is required but companies which operate filling stations in key locations are able to get away with higher prices.

Mr. William Prasifka

I thank the Chairman for his questions. I emphasis what he said in regard to our dependence on the public for our information. It is critical that people who are in the industry or have information make contact with the Competition Authority.

In regard to petrol station closures, the research conducted by my staff indicates a dramatic reduction in the number of retail outlets. Between 1997 and 2007, the number of petrol stations has decreased by more than a half. These are members of the Irish Petroleum Industry Association, IPIA, which represents the vast majority of petrol stations. In 1997, there were approximately 2,300 petrol stations but that number had dropped to just over 1,000 by 2007. There are several reasons for this steady long-term trend. Health and safety legislation has led to the closure of some of the smaller petrol stations and in more recent times property values have disadvantaged petrol over other uses such as apartment construction, although we may begin to see a reversal of that. Given the long-term nature of the decline, it must also be due partly to economies of scale. Petrol station operators will say that most of their money is made from ancillary forecourt activities, which indicates a scaling up in their operations. It strikes me that the trend is a result of Government policy as well as fundamental shifts in the industry. It is not apparent that particular measures can be introduced to reverse it other than relaxing some of the health and safety standards, which may be completely undesirable, so I do not see a quick fix.

The delay in the fall of prices at the pump in circumstances where world prices are decreasing is an issue not only in Ireland but globally. Last week in Brussels I attended one of the EU Directorate General for Competition's biannual meetings and heard a lengthy discussion on this very point by an erudite economist with a complicated financial model called rockets and feathers. He explained that prices go up like rockets but seem to come down like feathers. His model made as much sense to me as most of these explanations do. I can say, however, that the problem has been noted internationally. It does not arise solely in Ireland. When the Competition Authority sees a delay in price movement, particularly where one input forms a substantial component, alarm bells ring.

At issue is what we can do about this, which brings me to the Chairman's question of whether we can intervene when certain people charge very high prices. The National Consumer Agency has produced reports on grocery price comparisons and it strikes me that a similar exercise in the motor fuels sector would be useful to amass more information about markets. The National Consumer Agency is best placed to do this. The role of the Competition Authority is to continue to be very vigilant in terms of what is hard-core criminal activity, seek evidence and try to stamp out what is a very serious criminal activity, if it is occurring. There are two prongs. The first is more information and the other is that if a cartel exists, it is a matter of enforcement.

I accept that but on the issue of oil prices, which unlike most consumer products are subject to a pendulum effect on a continuing basis, especially at the moment, is it not possible for the Competition Authority to set benchmarks? For example, if the price of a barrel of crude oil is $100 today, that means we should be buying oil products at the pumps at X amount. Perhaps the Competition Authority could do an exercise to show the public that if the price of oil decreases by $5 tomorrow, that should mean a pretty immediate response from the retail industry in bringing down prices. I accept there are differences in the purchasing of oil but it strikes me that industry is getting away with murder by being able to use what is termed the rocket and feather approach.

Mr. William Prasifka

Setting some type of benchmark is really the kind of work expected from a price regulator, which we are not. We are an enforcement agency that acts where we see there is a restriction of competition or where there is an anti-competitive agreement. That is our remit and we have no expertise in setting prices ourselves.

That is okay. It is time we brought the Competition Authority and the National Consumer Agency together.

It is nice to have representatives of the Competition Authority before us. I know many people from my end — the northern end — of the country are very interested in these prices. After leaving my wee village of Nobber, from Kingscourt to Dublin there are ten different prices on the way. People cannot understand this but they might if they received an explanation.

As the Chairman stated, every day the price of a barrel of oil went up the price of fuel increased in tandem but it has not come down. This is someone's responsibility and the witness is correct in stating we should have the people responsible before us. The price to fill a car with fuel at the moment in comparison with the barrel of oil is unacceptable. As has been stated, hard evidence is required but it is evident from the petrol pumps that someone is having a good go at someone else, so to speak. Perhaps it can be explained that oil is bought forward by these companies and although it seems to be the way when the price is to decrease, it is not when the price is to increase.

It is time the Competition Authority and the regulator got together on this. People cannot afford oil for their heating as it is. That is a comment more than anything else.

Mr. William Prasifka

I understand the Deputy's concern. The problem we have at the Competition Authority is that, for the explained reasons, the evidence of the price at the petrol pump is not sufficient. We need to have real evidence of an anti-competitive agreement or practice before we can even invoke our powers. If we want to perform a search we must go before a court, swear an affidavit and convince the judge there are substantial grounds for us to invoke our powers. This is the environment in which we live. We are concerned about this area but we are constrained by the processes through which we must operate.

What applications have been made to the courts and have they been turned down?

Mr. Prasifka has said the authority is constrained by the processes but what does he recommend should be changed in respect of these processes to give a better ability to the authority?

I wish to make the point——

The essence of competition surely must be that prices are in line with the wholesale price. They are not, as Deputy McEntee stated.

Mr. William Prasifka

The issue of the delay in reduction of prices where there is not a delay in the increasing of prices has been observed as an international phenomenon. Economists have come up with rather complicated reasons as to why this may or may not be the case. The question is whether there are any kinds of changes to our power which could allow us to act more quickly.

This raises an entirely new direction for the Competition Authority which would mean we would become more like the European Commission. We would have the powers to investigate and decide cases and impose fines on our own authority. The position in Ireland is that only the courts can administer justice and impose significant sanctions.

The question asked was very open-ended and it goes off into an entirely different area. If we were to operate differently, it would mean a complete rethink and redesign of the Competition Authority as it exists today in Ireland.

Has the Competition Authority ever sought a search warrant to go into retail petrol outlets or companies associated with the business?

Mr. William Prasifka

It is a very important policy that because of the constraints under which we operate, we do not talk about our operational matters.

This is about accountability in these Houses and before this committee. I stress that I respect the Competition Authority. In its submission, it referred specifically to the question of search warrants so I ask Mr. Prasifka if the authority has ever sought search warrants that have been refused. How many have been sought?

Mr. William Prasifka

We have not done that.

The authority has never done so.

Mr. William Prasifka

Our staff are very highly-skilled and knowledgeable about the system.

I am not suggesting otherwise. I am just trying to cut to the chase of the matter. I do not question the staff or integrity of the Competition Authority. The key issue is that Mr. Prasifka has indicated in his address that the authority needs a search warrant to act but it has never sought a search warrant.

Mr. Ciarán Quigley

To get a search warrant we must have reasonable information.

Mr. Ciarán Quigley

We must go to a judge and convince him it is necessary for us to execute a search warrant.

It is due process.

Mr. Ciarán Quigley

If we do not have sufficient evidence to convince a judge to give us a search warrant, we do not go.

Sure, but the authority has never sought one.

Mr. Ciarán Quigley

We have never sought a search warrant.

That is the issue. I am just interested in the fact. The key issue is that when we talk of parallel pricing and so on, everyone would agree with the assessment of the authority.

We, as politicians, travel a lot throughout the country. I do not know if it was in the Chairman's constituency but when we would fill up going to the west, there used to be a petrol station this side of Moate which was cheaper by far than any other and that was where we would look for fuel. There are hotspots where one can get good prices and places where one cannot. One never knows why that is so but it is unusual that sometimes, outside a town in the middle of nowhere, one can get a great deal and everywhere around the town one can get nothing. Clearly such a business is trying to get market share.

In analysing cost, if petrol or diesel is bought in Drogheda as opposed to Dingle, one would expect the Dingle price to be higher than that of Drogheda because of distance travelled, bad roads and other costs. That is not necessarily the case. It is my experience — this is from the summer travelling to the west or to somewhere like Kerry — that there seem to be very high prices in Tralee, for example, especially in the summer, and in Dingle they are even higher. I have found over many years that it is very difficult for a consumer to get a good deal in Kerry. I am sure there are other places where one can get a good deal.

There is evidence which could be gathered, even over a period such as a season, about price movements in different towns. Such towns may be populated more by car drivers in summer than at other times of the year. I do not know if the Competition Authority has considered that or if that makes sense. Does such evidence exist?

Mr. Prasifka said that the consumer body should publicise the prices, showing where the cheapest petrol or diesel is in a county. If such information could be put on a website, it would lead people to the cheaper fuel if there was a significant difference. I am not being critical of the authority but I believe cartels are in operation because the prices are so uniform and change consistently. It is a consistent change and the price is consistently high compared to what it could be. Have you considered transport? Is the distance from the point of access for oil an issue in the pricing of petrol? Is it the case that the further one must carry the oil, the more expensive the product should be, because it becomes more costly? If so, then if one does not have to travel so far it ought to be cheaper. There are issues in this regard. I respect the integrity of your organisation and the fact that it stands up for consumers. Everybody knows this and welcomes what you have done in the diesel and oil industry.

My last question is probably more for the Garda than for the Competition Authority. Living in the north east, as I do, sometimes one finds a petrol station that has cheaper diesel but one does not know where it is coming from. I know it is often blended or comes over the Border. That is a big issue. Does the Competition Authority have any role in this? Does it have a role in assurance for the consumer at the point of purchase? I know it does not do quality testing as it is not its area. Is there any area in which the Competition Authority could intervene?

Mr. William Prasifka

I thank the Deputy for his questions and for the complimentary things he said.

I am genuinely sorry I said that.

Mr. William Prasifka

I fully accept that. There is a role here perhaps for the National Consumer Agency, as I have said before, in terms of publicising the fact that there are price differences. When we have considered this market, as we have in a number of different contexts, we can see there are issues of local competition which are undoubtedly important. It may be the case that one area is significantly further from the source of oil but the prices are cheaper. An important reason for that is local competition, which is driving price decreases. One of the ways to drive local competition and, in particular, to deal with some of the black spots would be for a body such as the National Consumer Agency, which has had some success in terms of getting people to shop better for groceries, to do the same for petrol. We do not have any role in quality control in this area. It is outside our remit.

One of the problems is that the price per litre is displayed, but many people do not know, physically, what a litre is, and think there is only tuppence between one place and another. Is there a case to be made for a requirement to publish, say, the cost of 10, 15 or 20 litres or a greater number? In that case people would know that 20 litres cost so much in one place but was cheaper in another place. There would be more knowledge for the consumer of the volume he or she is buying, notwithstanding the principle of caveat emptor. There is an issue in this regard.

Mr. William Prasifka

According to the law, petrol stations must display their prices. Whether or not there is any enhancement to this is outside our remit and is more a matter for the National Consumer Agency. Clearly, more information here would be better for the consumer.

I welcome Mr. Prasifka to the committee. He sent me a letter on this subject which is quite similar to the presentation he made today. There has been a decline of the network. In my own constituency there has been a catastrophic decline in outlets. Is it not a fact, therefore, that in the retail sector there is a grave possibility of local monopolies and cartels? For example, in Castletownbere in west Cork, which I know quite well, one has a choice of two stations and then one is 28 miles from the next one. That is a feature of rural Ireland. Even in urban Ireland, when one is very busy and the petrol indicator drops below the quarter mark, one will use the nearest Texaco, Topaz or whatever. Is there not, first of all, an issue of local monopolies and cartels?

Second, we should consider the macro issue. There have been massive changes and consolidation in wholesale oil supply in this country over the last year or two. For example, there has been the emergence of Topaz, while Statoil and Shell have left the retail market. Cost-cutters such as Tesco have also emerged. Was it not the responsibility of the Competition Authority to organise an investigation, given that three or four major groups seem to be dominating petrol and diesel supply in large tranches of the country? Is it any wonder one does not find much difference between south Donegal and Swords? I have raised this issue with the Competition Authority before. There was a particular oversight when Topaz was taking over one of those companies. Could the Competition Authority not, at this stage, organise a special investigation of the wholesale liquid fuels market? That was actually the point of my own letter to the authority about this subject some time ago. Is there not a prima facie case in this regard?

Several seemingly low-price sellers such as Tesco, one or two of which I see in my own constituency and neighbouring ones, have emerged. These are able to offer prices per litre which are often 5 cent or 10 cent lower than those of the bigger companies. Does that not itself indicate that there is a lot of fat in this market for wholesalers and retailers? This is prima facie an anti-competitive market. In my constituency, for example, one sees people queueing up the road at Clare Hall to get into Tesco. It is the same in Finglas, and so on. Are people not recognising that——

Sorry, Deputy Broughan; I will let you back in. Before Deputy O'Dowd leaves I want to mention the questionnaire I circulated. We are asking the American interns to carry out a survey among Members and staff. I want to get clearance from committee members for that.

Some might call these low price sellers loss leaders for a whole operation, such as Tesco. We do not know. However, they seem to be doing extremely well. In the UK, for example, Tesco's liquid fuels network is widespread. Again, is there not prima facie evidence for a case? If the Competition Authority has the power to do so — I see it says there are some restrictions — should it not move in on this?

I am sorry I missed the start of the meeting; I was watching it on the monitor upstairs. My colleagues have made the point about lethargy in the market in following movements of international oil exchanges and so on. The day after an oil price increase the price of petrol or diesel at the local station has gone up by 5 cent, 10 cent or 15 cent, but over the last few days we have not seen any movement whatsoever. It is as if all of this is happening in a vacuum. I know it is bought forward and so on. However, surely there is a responsibility for people to respond to changes in the wholesale and international market.

Mr. William Prasifka

I thank the Deputy for his question and also for the letter he sent to me. The first point he made was about the emergence of local monopolies. I am not sure whether the Deputy was here when I mentioned this, but what we have seen is a severe decline in the number of petrol stations. Over the past ten years this would appear to be a decline of over 50%. The fact of the matter is that we do have fewer petrol stations. This is a market in which local competition is very important. A decline of that magnitude raises serious issues of competition at a local level. The Deputy will understand that someone in my position cannot use the word "monopoly" lightly. For us it is effectively a legal conclusion which we only come to after not only an exhaustive analysis but, in many cases, a determination by a court of law.

We spoke earlier about the metro north and about integrated planning. This was a planning issue in my constituency and many of our colleagues, as well as many journalists, have written about the phenomenon Mr. Prasifka describes of the 50% fall in the number of petrol stations. Has the Competition Authority made any recommendation for including fuel outlets as a feature of integrated planning, along with the transport system itself — even if it is mainly public transport — the primary health care centre, certain types of shops, creches, schools and other facilities? Should the fuel supply station be part of that infrastructure? When the present Ombudsman was a journalist living in my constituency, she made that very case, that we must have integrated planning in respect of that type of service.

Now that the NRA is going to give exclusive rights to certain companies to establish pit stops on motorways, will there be any control over their pricing structures?

Mr. William Prasifka

On the issue of integration of planning in the retail sector, the Competition Authority published its own report a few weeks ago on planning in the retail grocery sector. We recommended strongly that when planners make decisions about granting planning permission, they should look at the matter from a competition perspective in order to ensure that there is sufficient competition in the market. In this case that would mean looking at the retail mix and ensuring there is an adequate degree of competition and choice for consumers.

We have not done the same exhaustive amount of work in the area of petrol. Clearly, however, we believe that as part of the planning process generally, there are many issues the planners must look at in terms of congestion, environmental and social issues. We think they must also engage with competition issues. The Deputy makes a very good point, especially concerning petrol where we have seen a significant decline in the number of outlets. That may be something to be thought about from a planning perspective as well.

The other point the Deputy made concerns whether the Competition Authority should now investigate the overall structure of the market. I share his concerns about the level of consolidation. It should be remembered that the authority's powers are in terms of enforcement. We can move against an individual firm where there is an abuse of a dominant position. After that we can only act if there is an anti-competitive agreement.

We could do a study on the entire area but what would it reveal? People have raised concerns that there may be a cartel operating in the area. If that is the case, the appropriate thing for us to do, rather than a study, is to use our enforcement powers. Because of the particular circumstances in which we operate, by which we can only enforce through the criminal law, doing a study, in certain circumstances, might prejudice or be seen to prejudice any enforcement action that we might take. In this area, therefore, having heard what people said, I wish to focus on the authority's enforcement powers——

It strikes me as I listen to Mr. Prasifka that the authority is really curtailed in a significant way if it only has enforcement powers under the criminal law. The biggest bugbear in this country is that prices are too high because competition is not sufficient. If one looks at the first five or six pages in a 12-page Sunday newspaper, they are full of advertisements from supermarkets that are able to pay considerable prices to advertise and yet tell us that they operate on the lowest level of pricing. It is known far and wide that anti-competitive practices are in place all the time in the concrete industry.

I appreciate what Mr. Prasifka has said to us. The authority must get hard evidence in order to prosecute. I suggest that we might ask colleagues in our sister committee whether it is time, given the constraints that Mr. Prasifka has detailed, that the Competition Authority and the Consumers Association of Ireland, which seems to be a fairly toothless body, got together? The outcome might be a change in legislation and the authority awarded powers it does not have at the moment to enforce competition in this country. At present it must work through the criminal courts. It is quite clear that in the area of petrol sales there is no competition and no control. The operators can do what they like. Would the authority welcome that suggestion?

It appears that the authority is in a catch-22 situation. The opportunity was there for it to have looked at some of these mergers, etc., but now a study cannot be done because that might be prejudicial. Therefore, in order to establish whether there were anti-competitive practices it must go in, all guns blazing, in the manner of a criminal investigation. We cannot find out in a general sense, using economic determinants, what exactly is going on. On that point, do other countries such as France or the United States, operate differently?

Mr. William Prasifka

I was about to say that both Deputies are absolutely correct. Our enforcement powers, in terms of substantive fines or substantial remedy, must come through the criminal process. That is simply the way the legislation stands.

Deputy Broughan may know of the Competition Commission in the United Kingdom. That commission can do a study of a market and as a result of that study can implement a structural remedy. As an example of that, the Competition Commission is looking at the British Airports Authority and competition for airport services in the London area. If it makes certain findings it can implement a structural remedy, which is a separation in ownership from the BAA of some of its London airports. There is no analogous provision here.

There should be.

Mr. William Prasifka

This would represent a substantial change to our powers and the way in which we do business.

Would Mr. Prasifka welcome that?

Mr. William Prasifka

I would welcome anything that would give us the ability to be more vigorous in promoting competition.

Am I wrong in saying that the authority is almost incapable of enforcing competition at the moment? It must get evidence in order to convict somebody in the courts and yet we all know there is a lack of competition. The authority should have the power to walk into some place and say to those in charge that they are not operating competitive practices. It is quite clear to everybody that the prices charged are considerably higher than they are elsewhere and the authority should be able to deal with them.

Mr. William Prasifka

It is correct to say that the competition regime in Ireland is effectively the weakest in Europe. Every other competition authority has the ability to initiate prosecutions, to make findings and to implement fines. This is a very substantial matter but one thing that concerns me is how such powers would operate in the Irish context. For the sake of argument, let us suppose that the authority had the power to levy fines directly or to make a structural remedy. What then would be the role of the courts? We have a concern that our work might be done quickly but if it simply triggered off a legal process, that might ultimately take years and frustrate the concerns that the Deputies have expressed. While I welcome the possibility of the authority having a much more robust set of powers, careful thought is needed as to how that would work out in this country.

The Competition Authority would still face a situation where cartels are operating. Serious issues such as the Galway case must be taken before the courts but that is separate from actual competition issues. What Mr. Prasifka has said today is very interesting. I suggest that he and his colleagues come back to the committee with proposals on further effectiveness that do not involve evidence gathering and prosecutions in the area of the retail motor fuel sector. We will also ask the Consumers Association of Ireland to return with similar proposals. I shall suggest to the Joint Committee on Economic Regulatory Affairs that it meets both organisations in order to deal with the wider issues which have arisen today, namely, building a much more effective authority by amalgamation and having new powers to deal with competition.

The Chairman raised an interesting point about civil penalties. We had that debate during the last Dáil on the communications and marine committee regarding fisheries and fishery penalties being criminal rather than civil matters. There were precedents from the regulator and it is in the news now. The Financial Regulator has the power to levy fines of up to approximately €5 million. He can levy civil penalties without sending someone to jail. The argument of the fishermen's associations, and we made it on their behalf, was that a civil regime applied to fishermen in other countries such as Spain, France and Holland, but they faced a criminal regime here. There are precedents in the Irish system for that.

I support the Chairman on the general point. I would also like something for wholesalers. At another committee this morning, four oil companies were present who seemed to be the dominant companies in the wholesale market. The wholesale issue needs to be examined. Our liquid fuel market has tended to be quite strange. We had colleagues present from the north east and the interaction with the Border and Northern Ireland, which favours the South, is unusual. It used to favour the North; people went over in their droves and it affected our national statistics. It impacts heavily on transport and business and it is something we would like some movement on.

Mr. William Prasifka

I do not want to paint an overly bleak picture. We have had 20 criminal convictions under the current system. Another important issue to consider is that the Competition Authority has found, and it is a view which is becoming a consensus view, that for certain types of competition offences, personal criminal sanctions are very important. There is a view emerging that simply levying fines on a company may not be a sufficient deterrent. A fine can be seen as a cost of doing business. Courts are sometimes reluctant to set fines at a sufficiently high level to penalise companies, but what always gets people's attention is individual criminal sanctions. Even where fines have been at a low level, we have found personal sanctions such as disqualifications from directorships, restrictions on travel and the threat of criminal incarceration are sometimes the most effective deterrents. The utility of civil penalties should be recognised, but for some of these offences personal criminal sanctions are the most important.

As Deputy Broughan mentioned, the Financial Regulator has new powers. They are as yet untested.

He used them yesterday with Irish Nationwide. One could say the bankers, in particular their rich and powerful leaders, always have a different regime to other businesses. It seems to be a worldwide phenomenon. We have precedent in that area.

In the 20 cases where people were punished, were they all for heating oil or were any for transport oil?

Mr. Ciarán Quigley

They were motor vehicles.

Mr. William Prasifka

We prosecuted three cartels. The first was the home heating oil case, which was responsible for 17 of the convictions. The other two involved car dealers.

I take the point made. Prosecutions under criminal law are undoubtedly very effective and we compliment the delegation on their success in that area. I have a difficulty with the largest filling station in the country holding up their prices five days after everyone else and nobody having the ability to impose some kind of sanction, if for no other reason than to expose that anti-competitive practice due to their dominant position. I have learned something today of the constraints place upon the Competition Authority by the system in which they operate. With a changed regime, it could be far more effective.

Gay Byrne was effective with his shopping basket. He made people aware of the price comparisons that existed. It was long ago and a different regime, but it is time we had a similar situation.

The delegation met the committee previously to discuss the issue of taxi regulation, and we will invite them back again. I was sorry I missed that meeting. They were definite that giving any control to the taxi regulator to regulate taxis was not in line with competition. Can the Competition Authority reconsider that view? We have carefully studied some of the examples they have given us, in particular from Sweden, and we have found there is greater control since the liberalisation of the taxi industry there. We are, first and foremost, in favour of competition in the taxi industry, but we are also keen to ensure that quality and standards are kept, but also that, in keeping competition, we do not have a licence printing operation as we have now. That is not acceptable. We are in discussion with the taxi regulator on this issue and we are determined to make recommendations to the Minister that there should be changes. We would like to discuss with the delegation if some there should be some form of qualitative cap. The situation in many parts of the country now, where taxi licences are for sale every week and one does not have to apply for a licence, is perhaps not as anti-competitive as we have been led to believe. We would like to have a further discussion on that issue.

Mr. William Prasifka

I would welcome returning to discuss the taxi situation. It would allow us to do some further work on foreign jurisdictions. I want to clarify the position of the Competition Authority. We do not believe there should be no regulation; we support the work of the taxi regulator to put in place qualitative controls. We saw a need for that. We have a problem with a quantitative limit on entry. That was our concern.

Surely if the situation, as it is now in Dublin, Galway, Waterford, Limerick and all over the country where one can look in the local newspaper and buy an existing licence, there is no need for a printing press to hammer our further licences and bring down the quality of the service, and the quality of employment for taxi drivers.

Would the people who buy a licence have a PSV? Would they be legally entitled to drive a car?

They must have a PSV and it must be approved by the taxi regulator. There is competition in the industry now because there are far more licences in existence. I want to see competition and a sufficient number of taxis in operation, but we have gone from one extreme to the other. We did not have enough taxis and we had a monopoly and we now have a very poor service in many places as a result of a printing press approach to licences.

I wish to comment on the location of retail services stations. There are at least two I know of in the Dublin region. One is on the quays and the other is beside the airport and they are both famous for having very high prices. The high prices are clearly related to their location. Somebody may be desperately seeking a station in central Dublin and is running low on fuel, and there may be a similar situation at the airport. It seems to be a price the market will bear. They are remarkably high prices.

Good points have been made here today on the abilities and powers of the Competition Authority. The public would like to know the structure of this market, what is exactly happening and why they are always carrying the can.

I thank Mr. Prasifka and his staff for giving the joint committee of their time. I found the discussion very intereting. We appreciate all the good work being done by the organisation and look forward to its response. We will write to the Competition Authority on the issue that I raised.

The joint committee adjourned at 6.20 p.m. until 10 a.m. on Wednesday, 15 October 2008.
Barr
Roinn