The Government is expected to ease the tight restrictions which have existed for almost a century on the opening of new pubs, following the Competition Authority's recommendation that the pub market be almost completely deregulated.
The Tanaiste, Ms Harney, and the Minister of State responsible for Consumer Affairs, Mr Tom Kitt, last night said they strongly favoured deregulating the pub business. Government sources indicated that the Taoiseach has been convinced for some time of the need to allow more pubs to operate in Dublin, and other Ministers also strongly favour such a change. The Competition Authority yesterday called for the issuing of pub licences to all applicants who pass criteria as to their suitability, the suitability of their premises and compliance with fire, safety and planning regulations. The existing highly restrictive regime - dating from 1902 - distorts competition, drives up Dublin pub prices and has created a shortage of Dublin pubs, the authority says.
Under the present regime no new licences can be issued save in highly exceptional circumstances. The distorting effect of these restrictions included the persistence of a price differential of 610 per cent for a range of alcoholic drinks (stout, spirits, domestic and foreign lager) between Dublin and non-Dublin pubs.
Publicans' representatives strongly criticised the report last night, but Government sources indicated equally strongly that this report would be acted upon rather than shelved. The recommendations are contained in an interim report from the authority on the licensing laws and retail drinks trade. It is the first time the authority has used its power, granted in 1996, to undertake a study of a particular market on its own initiative. The report concludes, according to its main author, Mr William Prasifka, that "the current licensing laws are a formidable barrier to entry, restrict competition and act against the common good."
Dublin has 29 per cent of the State's population, yet has only 9 per cent of the pubs, Mr Prasifka told a press conference yesterday. He said there was a particular increase in demand for alcohol in Dublin due to disproportionate increases in population, income and the demographic mix. The availability of licences had not kept pace with this increasing demand.
Dublin pubs were therefore both fewer and bigger than would be the case in the absence of barriers to entry into the business. Meanwhile, according to the report, the rural market remains characterised by a proliferation of licences and pubs, many on the margins of economic viability.
The deregulation of the trade would be expected to drive down the value of licences, particularly in Dublin where they change hands for anything between £150,000 and £500,000. Mr Prasifka said he could not say what the recommendations, if implemented, would do to the value of licences.
The Licensed Vintners' Association suggested last night that a devaluation of licences could infringe the constitutional right to private property. "We will take all necessary legal action to ensure our members' constitutional rights are protected," said the chief executive of the Licensed Vintners' Association, Mr Frank Fell.
The report anticipates the objections from publicans, remarking: "It is testimony to the power of the industry lobbying groups that much-needed reform . . . has been successfully stymied to date . . . The potential losers in any policy change in the licensing laws are prepared to expend real resources to lobby the Government."
The authority says it believes any scheme of compensation for the loss of value in publicans' licences to be unwarranted. "Compensation will not enhance consumer welfare. Compensation will only add an additional element to the social cost inherent in an antiquated system which a well funded lobby has successfully maintained intact to date."
Ms Harney also dismissed the suggestion that pub owners' concerns for the value of their licences should affect what is done. "Everyone has to look at it from their own perspective," she said. "The Government's perspective and my perspective is the consumer interest, the competition interest and clearly the impact on inflation. If we can reduce the price of alcohol in Dublin, that has a positive impact on the rate of inflation as well."
The report showed that Dublin consumers paid 6-10 per cent more for alcohol in pubs. "That means they are paying 25p on the pint, for example."
She said it was now up to the Minister for Justice to bring recommendations to the Government for changes in the law. Mr Kitt said he was very anxious to see more competition in the retail drinks market. He welcomed the findings which, he said, confirmed his belief that the price of drink in Dublin was far too high in comparison with the rest of the State.
A spokesman for the Vintners' Federation of Ireland, which represents rural pub owners, said: "There are too many pubs in rural Ireland . . . I don't know of anyone who has tried to become active in the pub industry who couldn't."
Democratic Left's finance spokesman, Mr Pat Rabbitte, said the report would provide a test for Fianna Fail, "as the party has a very poor record of standing up to vested interests in the licensed trade in the past."