Many tools of economic policy have moved out of the hands of Irish policymakers. Interest rates are now set in Brussels and the annual Budget is drawn up within guidelines set down in an EU pact. For this reason a key area where economic policy can now make a difference is in overseeing the competitive environment for business.
The Competition Authority has signalled its determination to use new powers given to it under legislation last year to tackle aggressively anti-competitive practices. As part of this programme, a report published yesterday on competitive practices in eight professions is to be used by the authority as the basis for recommendations on these areas. The report, commissioned by the authority and undertaken by Indecon Consultants, suggests that there is much to be done.
Of the eight professions studied, the consultants found the most serious anti-competitive practices in the legal profession and in medicine. The regulation of these areas restricts entry and competition, it found, through a variety of different mechanisms.
One example is the insistence of the legal profession that all solicitors qualify from a course run by the Law Society and all barristers from one organised by the King's Inns. Another is the limited number of places in medical schools and some of the restrictions placed in the way of doctors educated elsewhere who are seeking to work here.
The result of such anti-competitive practices is clear. Those involved in the business make higher profits and the consumer pays more. Mr Alan Gray, managing director of Indecon Consultants, estimated that prices to consumers could fall by as much as 20 to 30 per cent if competition was promoted in some of these sectors. While these benefits might take time to flow through, they provide an educated estimate from someone who has taken considerable time in studying the area.
Now it is over to the Competition Authority to act. Its chairman, Dr John Fingleton, has pointed out that many areas have been regulated with the producer interest in mind. It is time the consumer had a say. The authority is encouraging public debate on the Indecon report and will issue recommendations on the various professions in the months ahead.
In some cases these recommendations will require Government action. Having given the Competition Authority new powers and given it the job of policing this area, it is essential that the Government quickly acts on receipt of these reports. Encouraging competition must be an essential element of its strategy to develop the economy and to hold down the rate of inflation.