Progress on the implementation of competition recommendations welcomed by Government

The Government, at its meeting on the 11^th March 2010, reviewed the progress made by a number of Government Departments in responding to recommendations contained in reports published by the Competition Authority. The Government noted that 40% of the Competition Authority’s recommendations made between 2000 and 2009 have been implemented, with a further 9% being progressed.

The reports by the Competition Authority result from studies it has carried out on various sectors or professions at regular intervals and usually contain a suite of recommendations, aimed at improving competition in the relevant area and addressed to the responsible Government Departments or body.

The Government, in welcoming the progress made, stressed the importance of recognising that consumers, both business and individuals, are the final beneficiaries of strong enforcement of competition rules.

The Government is pleased to note the progress achieved in relation to some key recommendations based on their impact on competitiveness including:

The reduction of the wholesale mark-up on medicines from 17.66% to 10% and the retail mark-up paid to pharmacists, in respect of medicines supplied under the Drugs Payment and the Long Term Illness Schemes, from 50% to 20%.

The removal of a derogation preventing non-Irish qualified pharmacists from owning, operating or managing pharmacies which are less than three years old which will contribute to the further opening up of the pharmacy market.

The finalising of a contract allowing suitably qualified Clinical Dental Technicians to be reimbursed under the Department of Social and Family Affairs’ Dental Benefit Scheme.

The introduction of legislation which will facilitate the creation of a level playing field for all bus operators, both public and private, in the provision of bus services. The measures will serve the public interest by promoting regulated competition in the provision of public bus passenger services.

Further consideration of the Competition Authority’s recommendation that legal fees should, in practice, be based (and awarded) on work done, and not by reference to the size of the award received by the client, in the context of the drafting of a Legal Costs Bill.

The publication shortly of an Issues Paper for public consultation to help inform the drafting of new Retail Planning Guidelines. The new guidelines will strengthen the recognition of the benefits of a competition focus within development planning and development management and include a proposed methodology for incorporating a competition health check assessment by planning authorities.

Two recent publications have noted the importance of Ministers and their departments engaging constructively with this process. The National Competitiveness Council, in a June 2009 report, identified the application of competition law in all sectors of the economy as a priority for improving cost competitiveness and sustaining jobs (Getting Fit Again: The Short Term Priorities to Restore Competitiveness; National Competitiveness Council; 2009).

In addition, the recently published OECD 2009 Survey of Ireland welcomed the initiative and stated “the proposal that government departments should be required formally to consider and respond to reports of [the Competition Authority] is useful and would bring Irish practice into line with other countries”.

The Government acknowledges that competition can play a key role in ensuring that the Irish economy regains its competitiveness. It believes that increased competition contributes strongly to achieving high productivity and keeping prices low and therefore must operate in all sectors of the economy.

The absence of competition, whether within internationally traded or locally traded areas of the economy, has the potential to slow Ireland’s move to sustainable market-based growth. While competition has been a feature of the internationally traded sector to date, there is evidence that it is not as prevalent in the locally-traded sector as it should be. The commitment in the Building Ireland’s Smart Economy document, and in the Renewed Programme for Government, to respond to Competition Authority recommendations, will help address this issue.

The Government is very aware that consumers will be the ultimate losers from any lack of competition since this will mean increased costs, less choice or lower service quality.

The Government also decided to visit this matter, on a half-yearly basis to ensure that progress towards a “smart economy” is not being impeded by uncompetitive barriers in certain sectors or professions.

ENDS