Billions of taxpayer euro could be saved on National Development Plan projects by tougher enforcement of competition law, according to the State’s competition watchdog.
Cabinet on Tuesday was discussing a three-year strategy submitted by the Competition and Consumer Protection Commission (CCPC), which oversees mergers and acquisitions, consumer protection and commercial competition.
It lists tackling the risk of bid rigging, where contenders secretly agree on which one of them should win a contract, as one of the commission’s “key areas of focus” as the Government prepares to spend €275 billion overhauling the State’s infrastructure.
CCPC chairman Brian McHugh says international experience shows that, with public procurement on this scale, the potential cost to taxpayers of bid rigging could run to hundreds of millions of euro if not billions, he says. “That is the scale of harm that’s out there.”
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Discussing the proposed strategy, McHugh says the CCPC has the powers to tackle cartels and is keen to use them. “We really want to take on as many cases as possible but the reality is that will take resources. The more resources we have, the more cases we will take [on].”
Cartels, where businesses agree not to compete with each other in a given market, could be responsible for up 20 or 30 per cent of price increases on projects, McHugh notes.
The commission says it already has a “healthy pipeline of cases” but its chairman cautions that these investigations take time. Big companies have the right to challenge those investigations and any subsequent sanctions, and they have the financial resources to do so.
The commission has got extra resources from Government as its task has become more complex, including 56 more staff over the life of its previous strategy.
On consumer protection, McHugh says the CCPC is acutely aware of the impact of rising energy prices and the likelihood of food-price inflation on households. The commission continues to monitor both areas closely but he is comfortable that rising grocery prices here are “not the result of a dysfunctional market”.
The CCPC has reviewed grocery prices in Ireland several times in recent years, finding that the State has one of the lowest rates of food inflation in Europe. McHugh says that is largely the result of the presence of discounters in the Irish market.
“We will continue to keep an eye on them,” he says of fuel and food prices. “We never give any market a clean bill of health.”
Reviews are intended to highlight areas where reforms would benefit consumers. Currently, the CCPC is looking at pharmacies with a report due next year.
“Obviously it’s an important market, every family uses pharmacies,” McHugh observes. But it is also a complicated market in relation to how prices are set and how consumers end up going from their doctor to a particular pharmacy. “That’s something we want to understand,” he says.
Key issues include how pharmacies compete with each other in those circumstances and how consumers can shop around. What kind of information is available to them.
McHugh hopes the Oireachtas will pass legislation next year giving the CCPC the power to fine businesses for breaking consumer protection rules, as it already can do for competition law breaches.
Currently, these cases go to the District Court, which generally orders them to make a €1,000 contribution. Under the proposed administrative regime, the CCPC will decide on its own fines.
In doing so, the regulator would take account of the offence, the size of the market, how many consumers were affected, the level of harm inflicted on them and whether the company had previously broken the law, McHugh says.
