Tag Archives | The Competition Authority

Some thoughts on the proposed Musgraves acquisition of Superquinn

Yesterday I wrote a follow up to some tweets on Tuesday morning regarding the proposed acquisition of Superquinn by Musgraves.

I think this is going to be an interesting proposition for the Competition Authority, and the government. It could also give us great insight into how the future super-quango combination of the Competition Authority and the National Consumer Agency will operate.

While the Competition Authority will make the decision on the acquisition, it’s the National Consumer Agency at the moment who have all the information on pricing across the grocery market.

I personally don’t think that allowing the acquisition to go ahead will be good for Irish consumers.

I tweeted a few times yesterday morning about how the Competition Authority might handle the competition issues arising from the proposed purchase by Musgraves of Superquinn. From an employment perspective, it’s obviously important that as many of the 2,800 jobs are saved. However, jobs are not the responsibility of The Competition Authority.

Purely within the remit of TCA is the fact that competition in the Irish grocery market would be seriously diminished if Musgraves was allowed become the number 1 player via this acquisition. On average, according to the NCA, Supervalu (owned by Musgraves) is €9 more expensive for a basket of groceries than Superquinn, which is €3 more expensive than Dunned and Tesco. Allowing for the fact that the Superquinn outlets under Musgraves are likely to be priced at least as expensive as Supervalu, this takeover will only be bad for consumers.

It is, however, quite likely that Musgraves will play up on the more upscale image that the Superquinn brand has. And with the fact that the group will be the leading market player now, it’s quite possible that the prices in Superquinn could be increased beyond the prices in Supervalu – potentially even worse for consumers.

I’m particularly interested in seeing how TCA will approach this takeover. In the UK, competition laws were set aside to save banks through takeovers. Given political pressure, this could be demanded here also. Alternatively, TCA could just ignore the whole issue as a tactic to allow the acquisition to happen by default – blissfully ignoring all competition laws and duties as the did with the Topaz takeover of Statoil in 2006.  This will be the more likely action – political pressures will be satisfied, jobs will be saved, and no one has to do anything. Except the Irish consumer, again, who’ll be left to foot the bill.

Here’s the start of the political pressure anyway, from Willie O’Dea in the Dail yesterday:

I seek the adjournment of the Dáil underStanding Order 32 to raise a matter of national importance, namely, the sale of Superquinn to the Musgrave retail group, the competition issues that may arise from this agreement, the potential impact on the grocery sector across the country, the potential impact on the 2,800 workers employed by Superquinn and the need for the Minister for Jobs, Enterprise and Innovation to make this a matter of priority.

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New government, same old guff in the Dail

I use the excellent KildareStreet.com to keep in touch with what’s being said in the Dail that’s related to the area of interest for this website – i.e. consumer affairs. (I’ve written about the site a few times before – see here).

It was a regular question from members of the opposition during the last Dail to ask Fianna Fail / Green ministers when the National Consumer Agency and the Competition Authority merger was going to actually go ahead.

This merger was announced first in the 2009 budget (way back in October 2008), but nothing has been done to progress this merger since. I wrote about this previous, guessing that it’s a merger that wasn’t welcomed by the Competition Authority in particular.

As an example of the previous opposition questioning, back in October 2010, Joe McHugh TD (FG -Donegal NE) asked the following question:

To ask the Minister for Enterprise, Trade and Innovation his views on the changes in the organisation structures and delivery of back office support which have been made since the announcement of the merger of the National Consumer Agency and the Competition Authority; the values of the savings made; and if he will make a statement on the matter.

The then Minister responsible, Batt O’Keefe TD didn’t answer the question directly, merely filling space and time with a non-statement.

We’ve now been treated to a new government and thankfully, a new opposition, yet we’re still getting the same questions asked, and not answered.

On the 20th of April, Willie O’Dea TD (FF – Limerick City) asked the following question of the Taoiseach:

When can we expect to see the consumer and competition Bill that will merge the Competition Authority and the National Consumer Agency?

To which, Enda Kenny responded (or not really):

I cannot give the Deputy an accurate answer. We do not yet have a date for the Bill’s introduction. I shall report its progress as it moves through the system.

I think it’s enormously disappointing how poor Fine Gael have been in Government since they’ve taken over. They had such a great opportunity (in so many ways) to show they were different from Fianna Fail, yet they’ve shown nothing to prove that they’re any different in any way.

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Can someone tell Dan White at the Herald that the NCA is going away?

Dan White of the Evening Herald wrote yesterday evening about the fact that Ann Fitzgerald has declined to accept her bonus, thought to be €37,000 – 20% of her €186,000 salary. In his article, I can’t for life of me understand why this woman on the left was being given a bonus of €37,000, Mr. White channels ValueIreland in his commentary on the usefulness of the National Consumer Agency, headed by Ms. Fitzgerald.

Some of Mr. Whites comments are as follows:

With public anger at Ireland’s sky-high prices at boiling point, the Government had to be seen to be “doing something”.

That something was the NCA, a worthy talking shop which, apart from occasionally producing useful cross-border price comparison surveys, did nothing to address the problems it was supposed to solve.

He does go on to say that Eddie Hobbs “quit the NCA board in frustration a while back”. Strictly speaking, this is incorrect as Mr. Hobbs left the board because of his frustrations with Celia Larkin rather than the NCA itself. It should be remembered that despite this posturing from Mr. Hobbs, he did offer to rejoin the board if the then minister, Ms. Coughlan, reappointed him.

Back to Dan White, and his article.

Last year, Ann Fitzgerald was supposed to get a bonus of €25,000, prompting me to post the question – Value for Money – Ann Fitzgerald of the National Consumer Agency?

And here we are, a year or so later, and a couple of more shopping surveys in the bag, and Ms. Fitzgerald is deemed to be worth an extra €12,000 compared to last year in bonus payments.

At a time when people left right and centre are taking pay cuts, cessation of bonus payments, pension levies and any other manner of payment cuts, Ms. Fitzgerald is somehow deemed to be worth an extra €12,000.

Because she’s worth it I suppose.

Well, she is heading up an organisation deemed so important that it’s going to be merged into the Competition Authority soon enough rather than be left as a standalone entity. This was announced as part of a recent budget cull on quangos – one of the few to be culled.

Probably not a problem for Ms. Fitzgerald as I’m guessing that she’s going to be appointed it’s new head honcho since Bill Prasifka, formerly of the TCA, has moved to become the Financial Services Ombudsman.

Maybe someone should have told Dan White that the NCA is going away though – maybe he wouldn’t have written this final paragraph in his article:

While the Government has so far shrunk from grasping the nettle, it is surely only a matter of time before this Government or its successor tackles the enormous number of quangos, most of which seem to serve no other purpose than to consume tens of millions of taxpayers’ euro.

In any such quango cull the NCA would be a prime target. Now that the market has achieved what it was supposed to do, what is the point of the NCA?

While Fitzgerald’s decision may have bought the NCA some time, the questions about its role and usefulness remain unanswered. Far better to scrap not just the NCA but also all of the other quangos and their automatic “performance bonuses” as well.

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Competition Authority and National Consumer Agency. A marriage made in hell?

I wrote previously, Are the Competition Authority happy to be merged with the National Consumer Agency?, about how it was unlikely that the Competition Authority of Ireland were unlikely to be happy about their proposed merger with the National Consumer Agency. I wonder is that the reason we’ve yet to see the actual paperwork from the Minister in charge, Mary Coughlan, TD, to actually make the merger happen.

It looks like the different reactions from each of these quangos to the Minister for Enterprise, Trade and Employments proposal for a Consumer Ombudsman is going to cause further friction – coming as it does close to the time (apparently) when the merger is due to actually happen.

This article recently in the Irish Times from Paul Cullen, Agencies at odds over code of conduct for big retailers, covers the emerging differences of opinion.

What I’m more concerned about is this completely laughable statement, attributed in the article to the submission on the Consumer Ombudsman proposal made by the NCA to the Minister:

The National Consumer Agency, in a submission seen by The Irish Times, supports Ms Coughlan’s suggestion of a ban on unfair commercial practices in the grocery trade and says retailers should be prosecuted for treating their suppliers unfairly.

The bolded italics are mine. Remember, this is a statement that comes from a government quango that is more interested in maintaining the status quo by “working with” offending businesses rather than looking after the consumers interests by taking on big businesses who are breaking consumer legislation.

Then again, without having read too much about the Consumer Ombudsman proposal, it seems that the real meat of the proposals surrounds protecting Irish suppliers from the big grocery stores rather than protecting the interests of consumers – so I guess it’s logical that the NCA would be sticking their oar in rather than leaving it to the Competition Authority (in theory, the more competitent authority for those types of business to business transactions).

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Consumer advocacy and protection: is there something better?

Since I started my regular ValueIreland.com blogging I’ve been quite critical of both the National Consumer Agency (NCA) and, more recently given my experience of how it actually operates, the Consumers Association of Ireland (CAI).

My concern is that the consumer, through either of these organisations, doesn’t actually have anyone to actually stick up for them. The NCA is supposed to enforce the consumer legislation that we’re told will protect consumers but they don’t. The CAI tells us that they are a pressure group that represents the Irish consumer, yet can you remember the last time they put any pressure on anyone? Or when was the last time they reported to us how they’ve represented our interests on the multitude of boards and committees they sit on?

The National Consumer Agency is pretty much a spent force now since the announcement by the Government that it would be merged with the Competition Authority. This is a pretty ignominious end for an organisation that in the end, took longer to set up than it eventually existed for.

The Consumers Association of Ireland operating model is at the end of it’s lifespan now as well. Set up in 1966, and effectively operating in the same way is it did on day 1, the Association depends on the sometimes intertia of its continually falling membership not to cancel their direct debits for their monthly magazine.

I did start to broach this subject in a post earlier this month when it was suggested that the NCA and parts of the Financial Regulator would be combined when the NCA is merged with the Competition Authority.

But is there something different, and better, that can actually be done to protect and represent Irish consumers? Answers on a postcard!

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Useless quango reorganisations – Financial Regulator and National Consumer Agency

This story went up on the RTE website yesterday evening – Commission to replace Financial Regulator. The main point of the article is the planned realignment of the industry regulating responsibilities of the Financial Regulator back into the Central Bank (where it resided originally anyway).

However, of more interest to consumers will be the following statement:

The role of informing consumers, currently carried out by the Financial Regulator’s consumer director, will be transferred to the National Consumer Agency, which is being merged with the Competition Authority.

To a certain extent, I think that the principle of this move is to be welcomed. That is, that advice for consumers comes from a centralised organisation – rather than disparate organisations giving frequently overlapping advice to consumers which only serves to further confuse rather than clarify and inform.

But why not go further?

The National Consumer Agency doesn’t always prosecute when it comes to breaches of consumer legislation, but when it does, it names and shames.

The Financial Services Ombudsman does follow up and make judgements in favour of consumers, but they don’t release names of the offending businesses.

Why now, as well as amalgamating the information provision services, bring the consumer protection legislation enforcement responsibilities together into one place as well?

Throw the Financial Services Ombudsman into the mix proposed above, and provide one less place for consumers to have to worry about when it comes to knowing where to go to make their complaints.

That in itself would reduce much of the potential consumer confusion when it comes to who is actually supposed to look after their interests.

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Are the Competition Authority happy to be merged with the National Consumer Agency?

Probably not is the short answer.

Especially if you read the submission from the Competition Authority to the Consumer Strategy Group back in 2004 (no longer available online since the organisations merged, unsurprisingly). The Consumer Strategy Group was the organisation that recommended the establishment of the National Consumer Agency (NCA). The NCA effectively replaced the Office of Director of Consumer Affairs – they effectively did the same thing – just a different name and more staff and bigger budget.

Anyway, back to the thoughts of the Competition Authority in 2004:

While it might be tempting to see the solution to this problem being to merge The Competition Authority and the Office of Director of Consumer Affairs, this would be attempting too much too soon, in view of the divergences outlined above.

A better strategy would be to revitalise both the consumer protection legislation “package”, and the role of the Director of Consumer Affairs, to begin with. Strengthening consumer policy in this way, coupled with the continuing development of expertise in The Competition Authority, would better enable the complementarities to be exploited in the quickest way possible, leaving the question of institutional changes to be addressed later, if necessary.

Strengthening both policies concurrently would exploit the synergies without attempting to walk before we can run.

The problem mentioned, and the divergences referred to in the quote above relate to the Competition Authority view that the then ODCA (and probably the same case for the NCA today):

While the focus of the Office of the Director of Consumer Affairs has been limited by statute to a specific range of public enforcement instruments, a diverse set of other laws, rules and administrative practices affect consumers in a fundamental way throughout their lives – laws whose development the Office is powerless to influence. This, in turn, has stifled the role of that Office.

Essentially they’re saying that the ODCA of the day were useless and powerless to do anything. Which pretty much goes for the NCA today – useless, powerless and even more worrying these days, unwilling to use any of the limited powers that they actually do have.

The laws have been enhanced greatly in favour of the consumer since 2004, yet the National Consumer Agency – as I’m tired pointing out at this stage – are unwilling to enforce them, preferring their pathetic cop out of “working with” people who are breaching consumer legislation.

The statement from the Competition Authority also says:

Competition enforcement and advocacy has become much more focused in the past two years, following the enactment of the Competition Act, 2002. One important element of this is the continuing development of a tightly-focused Competition Authority with strong leadership, and comprising a good mix of skills in the economic, legal and public policy-making areas.

To my mind, an effective summary of the opinion of the Competition Authority at the time was:

We’re brilliant and the Office of Director of Corporate Enforcement is useless.

Given that the National Consumer Agency hasn’t done anything to improve on the protection of consumers in the past 4 years, one would have to guess that the Competition Authority would be equally against any merger between the organisations today.

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Getting rid of the National Consumer Agency?

Regular readers are probably aware that I’m not a big fan of the actions of the National Consumer Agency. And though it might have been expected, you haven’t seem me dancing in the streets with the news that the NCA would be no more following the 2009 budget announcement that the NCA would be merged with the Competition Authority.

Apart from a comment about the proposal on my original budget post, I haven’t really approached this subject.

There’s not a whole lot for me to say really, having thought about it since the original announcement. I absolutely believe that we need an organisation such as the National Consumer Agency to protect the interests of Irish consumers, but not operated in the way this organisation is.

The NCA has at least 60 different pieces of consumer legislation at their disposal under which they can protect consumers, yet during 2007 when they received at least 2,250 complaints regarding suspected legislation breaches, there were only the following prosecutions:

  • Failure to display price of grocery product – 3
  • Failure to display prices in a public house – 3
  • Failure to display price of petrol – 6
  • Other fines imposed – 4
  • Prohibition Orders – 3
  • Oh, and don’t forget the classic “undertakings” – there was 1 of those.

That’s less than a 1% prosecution rate – hardly “putting the consumer first”.

And what does it take to achieve this 1% prosecution rate – according to the NCA 2007 Annual Report:

The Agency employed 59 staff, of which 55 were civil servants on secondment from the Department of Enterprise, Trade & Employment, 3 were on secondment from Forfás and 1 is a member of staff of the Agency.

And at a cost to the tax payer of:

State funding was provided through the Office of the Minister for Enterprise, Trade and Employment, and amounted to €5,369,331 for the period ended 31December 2007.

We do need a National Consumer Agency – and possibly we need it to be independent and for it to not be merged with the Competition Authority – but for an organisation that claims to be “putting consumers first” it needs to do a whole lot more and to be a whole lot more effective before we can feel in any way protected.

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NCA still failing to discourage car clocking

I had the post below drafted earlier this week. It’s still current, but given the recent budget, it does raise a key question.

How much better protected will Irish consumers be under the combined National Consumer Agency / Competition Authority than they are now under the separate entities?

This post below shows the complete inaction of the NCA to use the consumer protection legislation that they could use, while I’ve written before about the uselessness of the Competition Authority – witness the spectacular 2006 failure to act over the Shell / Statoil merger.

We can only wait and see. If the proposed amalgamation isn’t going to improve consumer protection, then we’ll have to see what cost savings are going to be implemented instead. Either way, I suppose consumer protection in Ireland can’t get any worse:

In July of this year we reported how the National Consumer Agency was taking it easy on garages that were ripping off consumers by selling them clocked cars. At the time we felt that the practice by the NCA of getting the garages to promise to be good wouldn’t be enough to get garages to stop this clocking of cars.

Despite this, Ann Fitzgerald claimed that this softly softly approach:

Sends a clear message to other dealers that they cannot mislead consumers by selling them clocked cars and expect to get away with it

Obviously not, given this report at the end of September that the Airport Used Cars Centre in Cloghran in Dublin was caught having sold 4 clocked cars to consumers.

An unbelievably, given this clear evidence that the NCA softly softly approach isn’t working, they still won’t prosecute and fine the car dealer for breaching consumer laws and ripping off consumers.

What will it take for these fuckers* to actually do something to protect consumers?

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Tinkering Around the Edges – Budget 2009

That’s about the sum total of my thoughts on Budget 2009 from Brian Lenihan. Lots of messing around here and there, but nothing that really stands out as addressing the causes, or resolving the impact, of the problems that we’re faced with.

With regards to state agencies, you may have heard that the plan is to:

proceed with 30 rationalisation proposals that will reduce the number of bodies by 41, streamline functions in 3 areas and rationalise the army barracks structure bringing it more into line with operational requirements and permitting economies of scale.

This does mean that the National Consumer Agency will be merged with the Competition Authority. There’s no further details on what the implications of this will be. Still – let the Celebrity Death Match between Ann Fitzgerald and Bill Prasifka begin. The winner gets to look after the consumers interests.

Suffice to say that in the short term, it won’t actually mean a whole lot anyway, and it’s unlikely to really save any money in the long term. Job losses? Hardly. Cost reductions? Unlikely. All we can hope for is that the interests of consumers are better served by the amalgamation of two useless regulators into one. We’ll see if two wrongs with regards to consumer affairs can actually make a single right.

Possibly the most interesting aspect of this decision is the fact that the National Consumer Agency was longer an interim (a pretend, powerless) organisation that it was an acutual properly functioning agency. It was announced in 2005, received statutory powers in 2007, and is now slated for amalgamation in 2008.

Isn’t that a damning indictment of the uselessness of the agency itself, and a perfect illustration of the complete failure of this governments policies and actions in looking after Irish consumers?

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