A Code of Practice for Grocery Goods Undertakings and An Ombudsman: How To Do A Lot of Harm By Trying To Do A Little Good. WP320. October 2009

The Department of Enterprise, Trade and Employment in its August 2009 Consultation Paper, Code of Practice for Grocery Goods Undertakings, argues that a Code governing grocery supplier/retailer relations, enforced by an Ombudsman, should be introduced. The Code constrains the behaviour of the retailer with respect to certain practices that, for example, shift risk from the retailer to the supplier as well as those result in unexpected costs to suppliers. The rationale for the Code appears to be that due to the devaluation of sterling, combined with the recession, retailers are able to put increased pressure on local suppliers for lower prices, which in turn squeezes suppliers’ margins. The paper argues that the Consultation Paper does not present a sound rationale for the Code, in reality the Code is a form of protectionism occasioned by the inflow of lower priced imports. Local suppliers should adapt through developing better products and becoming more efficient, rather than seeking shelter from market forces. The impact of the Code will likely be to lead to: higher consumer prices lowering consumer welfare and thus inconsistent with the declared aim of the Code; increased costs of doing business with local suppliers thus leading to an incentive for retailers to use more imports; and, perhaps, a less competitive grocery sector. It is argued that the Consultation Paper should be withdrawn and reissued, but in a manner consistent with the government’s better regulation agenda which is currently ignored. To the extent that the issue of concern is excessive buyer power of retailers then that should be addressed directly: by liberalising the Retail Planning Guidelines as the Competition Authority has been arguing for sometime; and/or sponsoring entry of new retailers; and/or amending competition law, if a problem exists and can be demonstrated to exist, but retain the competition test. The answer, based on the evidence presented in the Consultation Paper, is not the Code

THE RECESSION, BUDGETS, COMPETITION, AND REGULATION: SHOULD THE STATE SUPPLY BESPOKE PROTECTION? RESEARCH SERIES NUMBER 12 OCTOBER 2009

Recessions are harsh. Demand declines. Firms shed labour, reduce output or file for bankruptcy. Pressure mounts to reduce prices and increase productivity. Returns decline; margins are squeezed; dividends are suspended. Unemployment increases. Firms seek to delay payments to suppliers, while simultaneously demanding suppliers reduce input prices and extend credit. Carefully assembled workforce teams are broken up. New products and innovations are put on hold. Competition is characterised as cut-throat, destructive and excessive. Faith in markets begins to be questioned

Economic Regulation: Recentralisation of Power or Improved Quality of Regulation?

The October 2009 Government Statement on Economic Regulation proposes a number of sensible reforms that are likely to improve regulatory performance in energy, airports, telecommunications, postal services and transport. However, the Government Statement also proposes to reduce the independence of regulators by holding them to account through a whole series of additional mechanisms, some of which are informal and lack transparency, while at the same time instructing regulators to take into account evolving/current – possible transient – priorities. There are good reasons for preserving and strengthening rather than undermining regulatory independence. For example, it facilitates investment in long-lived assets with a large element of sunk or irrecoverable investment, a common characteristic of network sectors. The Government Statement’s unexplained move to reduce regulators’ independence finds no support in either the government commissioned background report prepared by the Economic Intelligence Unit, Review of the Regulatory Environment in Ireland, or recent European Union legislation on energy and telecommunications regulation. Indeed, these sources are strongly in favour of regulatory independence. Two, not necessarily mutually exclusive explanations, for reducing regulatory independence are discussed: to remove an anomaly in the Irish political system; and, to assist in the delivery of social partnership. The paper concludes by arguing that some thought might be given to public consultation of the reforms in the Government Statement prior to further implementation.

Regulating Small Public Service Vehicles in Ireland: Is There a Problem of Oversupply?. ESRI WP441. October 2012

The small public service vehicle (SPSV) market in Ireland appears to have adjusted well to the changed economic circumstances. The reduction in demand for SPSV services occasioned by the recession has been met by a price and quantity adjustment. Prices are regularly discounted off the regulated maximum fare, while the number of SPSV operators has dropped by about 6 per cent per year since 2010. Estimates of oversupply of 13 to 22 per cent, albeit arguably biased upwards, are likely to be eliminated by the end of 2013/early 2014 at the earliest, and 2015/16 at the latest. Strategies have been put in place to deal with non-compliance with social welfare and tax rules. Hence for the Taxi Regulation Review Group in its December 2011 Report to base recommendations for extensive policy intervention on the view: (i) that there is considerable oversupply of SPSV services; (ii) that this is influenced in an important way by non-compliant operators; and, (iii) there is low exit from the industry is incorrect. Indeed, these recommendations which are being implemented, while no doubt containing sensible suggestions with regard to wheelchair accessible services and rural hackney services, at the same time will have the effect of reducing the flexibility of the SPSV market based on a model that seeks to favour the role of full time taxi operator. When combined with the 2010 prohibition on the issuing of new taxi and hackney licences, there is a real danger that when the economy revives and demand for SPSV services increases that there will be increased waiting times as they were in the 1990s when taxi numbers were restricted. There is an urgent need to reconsider these policy initiatives

PROVIDING QUALITY PHARMACY SERVICES: GOOD INTENTIONS ARE NOT ENOUGH. ESRI Research Bulletin 2010/3/5

Elected representatives, like consumers, want reliable good quality medical services. Pharmacy services are no exception. Providing sound advice on which drug to take for a minor ailment, or the common side effects of a drug or keeping careful track of a consumer’s drug regimen, promote good health outcomes

Economic Regulation: Recentralisation of Power or Improved Quality of Regulation?. ESRI WP373. February 2011

The October 2009 Government Statement on Economic Regulation issued proposes a number of sensible reforms that are likely to improve regulatory performance in energy, airports, telecommunications, postal services and transport. However, the Government Statement also proposes to reduce the independence of regulators by holding them to account through a whole series of additional mechanisms, some of which are informal and lack transparency, while at the same time instructing regulators to take into account evolving/current – possible transient – priorities. There are good reasons for preserving and strengthening rather than undermining regulatory independence. For example, it facilitates investment in long-lived assets with a large element of sunk or irrecoverable investment, a common characteristic of network sectors. The Government Statement’s unexplained move to reduce regulators’ independence finds no support in either the government commissioned background report prepared by the Economic Intelligence Unit, Review of the Regulatory Environment in Ireland, or recent European Union legislation on energy and telecommunications regulation. Indeed, these sources are strongly in favour of regulatory independence. Two, not necessarily mutually exclusive explanations, for reducing regulatory independence are discussed: to remove an anomaly in the Irish political system; and, to assist in the delivery of social partnership. The paper concludes by arguing that some thought might be given to public consultation of the reforms in the Government Statement prior to further implementation

Letting the Punishment Fit the Crime: Sentencing in Cartel Cases in Ireland. ESRI Research Bulletin 2013/2/1

Cartels – agreements between competitors to fix prices, allocate customers, and/or limit output – harm consumers. Cartel members raise their profits by, in effect, imposing a small, but nonetheless illegal, per unit ‘tax’ on consumers. Combating cartels requires not only detection and prosecution, but also the imposition of proportionate sentences

IS A CODE OF PRACTICE NEEDED FOR THE GROCERY TRADE? ESRI Research Bulletin 2010/1/2

The introduction of a Code governing grocery supplier/retailer relations, enforced by an Ombudsman, is favoured by the Department of Enterprise, Trade and Employment in its Consultation Paper, Code of Practice for Grocery Goods Undertakings (August 2009). A recent analysis of the issues† questions the need for a Code, and suggests that the issues which have prompted calls for such a Code would be better dealt with in the context of the government’s “better regulation” agenda and the provisions of the Competition Act as amended in 2006

Merger Control in Ireland: Too Many Unnecessary Merger Notifications?. ESRI WP383. April 2011

The market for corporate control plays an important role in ensuring that assets are deployed in an efficient and effective manner. However, on occasion, mergers might lead to a reduction in competition and a consequent rise in prices and/or other anticompetitive effects. The Competition Act 2002 provides that all mergers that meet certain financial thresholds must be notified to the Competition Authority in order that they are subject to a competitive effects assessment. However, there are concerns that the notification thresholds result in many mergers with little or no nexus to Ireland being notified. While it is the case that the vast majority of merger notifications do not raise competition concerns, Ireland is not out of line with other jurisdictions which have mandatory notification thresholds such as the EU and the US. Nevertheless, that should not lead to complacency. The paper quantifies the impact of reforms made in 2006 and 2007 by the Competition Authority and the Minister of Enterprise, Trade and Employment to the merger notification thresholds. The evidence suggests that these tighter better specified thresholds led to a reduction of at least 40-50 per cent in the number of merger notifications. However, more could be done, albeit probably to a lesser extent than the earlier reforms. Applying the International Competition Network’s Recommended Practices for Merger Notification Procedures, a series of proposals are made in the paper for revising the merger notification thresholds to better select mergers with a nexus to Ireland. Such moves should facilitate a more effective and efficient market for merger control by reducing transaction costs involved in the merger process as well as allowing Competition Authority resources to be deployed elsewhere, a not inconsiderable advantage in a period of austerity

The Impact of Free GP Care on the Utilisation of GP Services in Ireland: An Evaluation of Different Approaches. ESRI Working Paper No. 534, June 2016

The successful implementation of free GP care for all private patients in Ireland requires an estimate of the likely change in the number of GP visits occasioned by this policy so as: (i) to set the capitation fee; and (ii) to ensure adequate supply of GPs is in place. The paper examines two methodologies to derive such estimates: retrospective patient self-reporting or recall (e.g. Growing Up in Ireland, The Irish Longitudinal Study on Ageing); and, GP practice records. Estimates based on six GP practices by Behan (2013, 2014) substantial overestimate of the likely impact of free GP care. McGovern’s (2015) more recent estimates for the HSE, based on patient recall, used in forecasting future demand for GPs to 2025 also appear to be biased upward. The underlying studies, assumptions and papers are not, however, cited. This should be corrected. A proper debate and discussion can then take place concerning the optimal phasing in of free GP care