Pint prices to rise again?

El Siglo wrote: »

Thank you Economist

Don't thank me, I had nothing to do with it. I'm sure the Competition Authority would appreciate it if you said thanks, though

rubadub wrote: »

I thought this price freeze was just a suggestion to pubs? i.e. it had no legal bearing at all and pubs certainly have been upping and lowering prices, I thought it was formally stated soon after it was announced that it was just a mere suggestion.

If so WTF are the high court getting involved?, and who footed the bill for the courts time on this ridiculous waste of time & effort. The taxpayer probably....

This is what JohnK was getting at when he said...

JohnK wrote: »

Was it not the case that the price freeze was an upper limit on the price they could charge? In other words that they could charge whatever price they wanted but couldnt exceed a certain amount so in effect there was nothing stopping them from dropping prices all along?

...to which I replied "It's complicated, but basically no." Now I'll try and explain the jist of the complicated bit.

Cartels rip people off. They go out of their way to charge higher prices to rip people off. It's stealing. Everyone agrees that over-charging the people of Galway and Mayo by €4m a year is wrong. I think it's worse than robbing €4m from a bank -- at least a bank has insurance, etc.

But unlike bank robbers, cartels don't leave much evidence behind. There's no smashed window, finger-prints, or opened safe. It's five lads in a pub or sitting-room talking for ten minutes a year. They don't even have to say anything illegal. "Hi Ted, I hear you're charging €5 this year. Me too. Anyone else?" That's it.

Five men can't do that much damage. They might be the five men who own pubs in Thurles, and if that's the case Thurles takes a bit of a hit. What's really dangerous is when somehow all the pub owners in the country agree on prices. So you have "trade associations".

Trade associations do some good. If you want to build a road, asking the engineers' association is a good idea. They can enforce standards and kick out bad members. Grand. But they can also do a lot of harm.

This is why section 4 of the Competition Act explicitly forbids any agreements by trade associations (such as the Vintners) that tries to "directly or indirectly fix purchase or selling prices".

Businessmen aren't idiots. They know well if they come out saying "Let's all raise prices" that they'll be prosecuted. So cartels come out with notices "advising" or "suggesting" members do this that or the other to prices. The only thing that's missing is the wink and the nod.

Section 4 of the Competition Act (and Article 85 of the EC Treaty) is phrased precisely to outlaw any of these "suggestions". Why? Because we all bloody well know that there are cartels robbing us blind, but we don't have enough evidence to convict them. So we bring in a law saying you cannot even talk about prices. It doesn't stop the five lads in Thurles, but it prevents scum changing things nationwide with "suggestions" of their competition should set their price.

So you ask why did the High Court get involved and who paid for it. The High Court got involved because the Competition Authority brought the Vintners there. They didn't bring the Vintners to court under the Competition Act, they did it under contempt of court proceedings. Why? Because it's not the first time the Vintners have done something like this. When they did, rather than go the full legal route, the Competition Authority reached an agreement with the Vintners (with a court order) essentially saying "Down with this sort of thing." The Vintners weren't careful now, blatantly broke the terms of the agreement, and that's why the High Court got involved.

Who paid for it? The Competition Authority have legal advisers who are paid by the State so I guess you could say the taxpayer paid for it. This is exactly what taxpayers should be paying for: a few quid to make sure they're not robbed blind. And save us from being robbed blind they do: be that by vintners, home heating oil, grain importers, car sales, or a €250m government beef scheme.

Though you rest easy, the Vintners will have to pay costs seeing as they lost.

A lot of this could be solved in my opinion if they removed the need for a license. If you or I could but a location turn it into a pub and get going it would make things more competitive. As it is if a pub goes on sale (in Navan lately anyway) it and it's license is snapped up by a current publican who then sells the pub without the license so it can be turned into a bookie or a car park and there's one less competitor in town.
It's not helped either that pub's hands are tied when it comes to promotions as you can no longer do happy hour or such. That move should be repealed to help.

Slow Motion wrote: »

See this is the problem. Publicans attitudes to falling custom has always been to put the prices up, whereas every other business drops their prices to increase footfall, look at any of the retailers! No one can guarantee an increase in the volume of sales, however I can guarantee that as long as publicans have this attitude sales volume will decrease! I have never come across a pub that lowered it's prices other than the occasional promotion which is a rare occurrence these days, I am open to be corrected on this.

I sort of agree with you, however one thing that I would like to point out is many pubs are owned by people for purely status, or economic purposes. There are very few proper 'publicans' around these days. I.e, an owner who will be in the bar, knows his regulars, mingles with others, and actually gives a ****e about the customers.

That'a the problem though.
Publicans, claim to be losing money.
But despite all the pubs that have closed down, price fixing still seems to be their preffered strategy.

Competition is beyond these people. They are motivated by profit.