Consumer agency needs more bite

WE were promised a great cull of quangos, three years ago.

Consumer agency needs more bite

Most of the beasts are still roaming the land, but two of them are set to march up the aisle in merger/ matrimony following publication of the long delayed Competition & Consumer Protection Bill.

Once the legislation is passed, the Competition Authority and the National Consumer Agency will cease to exist and the happy couple will live on as the Competition & Consumer Protection Commission. Quite some mouthful, that.

According to a note issued by the law firm, A & L Goodbody, the change means that we will be moving closer to the model used in Australia and the US. It is envisaged that consumer issues will be given higher priority in competition law enforcement.

That said, it is interesting to note that four out of the five ‘members’, or directors, of the new body will be drawn from the former Competition Authority, with just one member, Karen O’Leary, coming from the National Consumer Agency side of the fence.

Ms O’Leary has served briefly as CEO of the agency, having taken over from Ann Fitzgerald, an experienced representative voice who made regular media appearances. One of the problems in Ireland has been the lack of a really strong independent consumer advocacy organisation.

The Consumers Association of Ireland has never been richly endowed and, at times, it has appeared to be seriously outgunned by highly professional producer outfits like the IFA, and by the big grocery retailing battalions which can garner plenty of favourable publicity through regular jobs announcements.

This weekend, the Tánaiste Eamon Gilmore was present at the unveiling of a new 65-job Tesco store in the heart of his Dun Laoghaire constituency, extending effusive words of welcome. Politicians do not bite the hands of jobs providers, even those who are in a position to dictate sometimes harsh terms to suppliers. Customers have fared better, recently, in the competitive grocery marketplace, but in many key areas of service provision, particularly in financial services, they have been treated shabbily.

One can only hope that the consumer voice will permeate through the new body which will be headed by Isolde Goggin, one of a growing number of women now occupying top regulatory or judicial posts in the country. It would be nice to think that consumers of financial and professional services, often dazzled by complex pricing regimes and misled by offers, could benefit from a revivified agency.

The legislation promises a tougher enforcement regime, with the new agency being given power to apply to the courts for an order to require those suspected of anti competitive behaviour to produce a wide range of records and documents to investigators.

The bill extends the provisions of the Criminal Justice Act 2011 and the Communications (Retention of Data) Act, 2011 to serious competition law offences.

The Competition Authority has suffered in the past from a drain on staffing and resources. In an interesting analysis in 2012 for the publication, Comp Law, Aileen Murtagh of A & L Goodbody pointed out that while the authority produced a series of market studies during the Noughties, including a report on the legal profession published in December 2006, its reform agenda was “superseded by the cataclysmic events of 2008”.

Staff levels were cut. The authority lost most of its top investigators, some of whom returned to the US. In October 2008, the Fianna Fáil-led government announced the amalgamation of the authority with the National Consumer Agency in what amounted to a cost-saving exercise.

This only now is coming to pass. Indeed, the OPW has yet to find a new HQ ‘house’ for the ‘happy couple’.

Aileen Murtagh believes that the long delay in putting the merger in place has created uncertainty, hampering for a while the ability of the Competition Authority to play a meaningful role. However, a big breakthrough came with the arrival of the troika back in November 2010.

Competition issues are given high priority in the European Commission. Around 2005, a new EU competition regime was put in place by then Competition Commissioner, Mario Monti.

In effect, the task of enforcement was devolved to national authorities as it was felt that Brussels could no longer exert full control from the centre, given enlargement and the increasingly sophisticated nature of anti competitive behaviour in the form of cartels, or abuses of dominance.

The EC has concentrated on big ticket face downs with global players such as Microsoft.

The authority managed to insert a number of key competitive goals into the EU/IMF Agreement reached with the Irish Government and commitments were made around staffing to the troika, allowing the authority to function with renewed effectiveness.

The authority is now back close to its full compliment of key staff, but still facing into the distractions from the yet to be completed merger. Later this month it will be in the High Court to present its case against the Irish Medical Organisation over the withdrawal of services.

The authority maintains that the doctors as self-employed professionals have been acting in concert and in breach of Competition Law. It settled a similar claims brought against the Irish Dental Association some years ago.

On occasions, the authority has bared its teeth. It secured 17 convictions on indictment on foot of a case brought against home heating oil providers engaged in price fixing, levying fines of almost €120,000.

It secured 15 convictions on indictment against executives from Ford and Citroen. Nine people received suspended prison sentences, one of whom received a 28 day sentence for not paying his fine.

More recently, it has issued a report highlighting issues in the country’s ports and in February it took the Taxi Regulator to task over proposed new regulations requiring all new tax entrants to have wheelchair accessible vehicles. It expressed concern that the new regulations created added barriers to entry for would be taxi drivers.

The new body will no doubt await with eagerness legislation on the regulation of the legal profession, with indications that the Law Society has clawed back some lost ground, following a vigorous lobbying campaign.

Lawyers A & L Goodbody have expressed concern that the new bill could erode the protections of confidentiality in respect of communications between individuals or firms under investigation and their legal advisers.

There is also considerable debate over plans in the bill providing for a code of conduct in the grocery sector. The minister of jobs, enterprise & innovation is given the power to make regulations aimed at preventing the unilateral alteration of contracts with suppliers by retailers.

The minister can also crack down on demands for ‘hello money’ for space on supermarket shelves and on suppliers to bear part of the cost of promotions. Similar ‘protections’ have been contained in previous acts, but little has come of them. Lawyers express concern that enforcement of such protections by means of regulation could be compromised by political expediency.

Another major provision in the legislation concerns media mergers and joint ventures: it will be up to the minister of communications in place of the minister for jobs, enterprise & innovation, to rule on whether a proposed media merger meets a rather broad ‘media plurality test.’

The bill represents the seventh attempt at competition law reform since 1991. The core legal framework remains in place, however. A key issue remains to be addressed : because of constitutional issues, the Competition Authority will still not have the power to impose fines for civil offences on those engaged in anti competitive behaviour.

Instead, it must satisfy the much heavier criminal burden of proof ‘beyond reasonable doubt’ as opposed to proof ‘on the balance of probability’ when taking cases.

A change in the law, here, will require a referendum, one that the Government is reluctant to hold.

This leaves the new body without the sort of useful tools for enforcement available to sister bodies around the European Union.

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