Consumers being ripped off by monopolies

DISCLOSURE earlier this week that Bord Gáis saw profits dip in 2003 by more than 9% and that debts have mounted to over €1 billion is cause for concern.

This happened in a year when sales increased by 7% and when consumers were hit with a 10% hike in prices.

Mounting debt in a state owned company is nothing new, but it could have serious implications for how the group performs in the years ahead.

Look at the shambolic state of CIE which has had over €100m a year pumped into it by the state down the decades to keep it from sinking under a mountain of losses.

Despite the continuing cash injection CIE is still a state monolith proving extremely difficult to streamline despite the best efforts of those involved in public transport group.

Given the bad news in the Bord Gáis figures one cannot help wondering why there was any mad rush to get them into the public domain before the formal announcement by the group next week of the figures.

This is of course the third time the figures have been leaked ahead of schedule.

If BG was publicly quoted the dip in profits and the mounting debt disclosed in the figures would have resulted in its share price being hammered.

As a state owned company it does not face such censure. Its role in the Irish economy however is open to scrutiny.

Successive Fianna Fáil/PD governments have banged on about competition, deregulation and liberalisation to the point of tedium.

When it comes to giving consumers advice Tánaiste and Minister for Enterprise, Trade and Employment, Mary Harney is quick to offer free advice to consumers.

"Shop around" she has advised in the past. The financial regulator IFSRA offered the same piece of advice last week after publication of its investigation into Credit Card charges.

In the private sector consumers have some chance of securing a better deal, but none whatever when faced with a monopoly.

In reality they are caught too often in a take it or leave it plight when faced with monopolists.

Not that the private sector is without guilt in this regard either. CRH, the building materials group, built its global business on the back of its Irish monopoly.

Irish Distillers, now part of Pernod Ricard had a pretty free run for years, but never managed to capitalise on its strong Irish base on international markets.

It was haunted by its failure to make it in the US market which was the reason the group was formed back in 1966 in the first instance.

On private sector monopolies it is forgotten that less than 15 years ago up to 20 insurers offered general insurance cover in the Irish market.

Bank of Ireland and AIB dominate Irish banking.

And the biggest rip off of all was the Eircom debacle where the only ones who have made money out of that charade have been the golden circle and the state and the biggest insult of all is that Eircom is still a major monopoly in the land line business.

From a consumer perspective the scene is pretty bleak. In the case of BG it used its monopoly to offer low prices to the public to win them over to natural gas.

With that mission accomplished prices are finally on the way up 10% last year and the prospect of on going increases look a near certainty.

So far the regulator has been a toothless wonder and those stuck with the prevailing monopolies find it very difficult to "shop around."

Competition as an ideal has been talked about now for nearly a decade. Consumers know from the rate of cost increases here that it is a myth. And their experience is not confined to the public sector.

Would the Irish Bankers Federation like to inform us how many consumers switched their banks in the past 12 months?