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Melvyn Mangion on Illicit trading in Ireland
1. 1
Illicit Trade in Ireland
Uncovering the cost to the Irish economy
Dublin, 25th April 2013 –by Mr Melvyn Mangion
Reportcompiled by Grant Thornton and RetailIreland
Illicittrade hasa significantimpactonthe Irisheconomy.The objective of the reportistoprovide a
detailedassessmentof illicittrade inIrelandacrossaselectnumberof sectors,namelyfuel,tobacco,
digital mediaandpharmaceuticals.
The report seekstounderstandthe impacts,identifykeydriversbehindthese illicittrades, andwhere
possible,quantifiesthe lossestothe economy.Italsoproposesanintegratedapproachtotacklingthe
problemof illicittrade inIreland.
The ongoingeffectsof the economiccrisishave broughtIrishcitizensintocloserproximitywithillicit
trade and aspectsof organisedcrime.The addedfinancial constraintshave made communitiesmore
toleranttowardsillicitcommoditiesespeciallycounterfeitgoodsandcreatedperceptionthatitisa
“victimlesscrime”.
Intellectual Property
IP contributesenormouslytothe economybothinternationallyanddomestically.However,the growing
threatof IPcrime is threatiningtounderminethe benefitsof IP.The increasingnumberof IP
infringements –copyrightpiracyandtrademarkcounterfeiting –generate significantfinanciallossesto
legitimate industries,the Governmentandconsumers.Beyondthe purelyfinanciallosses,IPCposesa
threatto the welfare of consumersthroughhealthyandsafetyconcernsandthe growthinorganised
crime.
OrganisedCrime
The growth of organisedcrime hasimpacton all levelsof societyanditisa threatto the social well-
beingof boththe State andits citizens.Crossborderactivitiescontinue tobe afeature of organised
crime across the Islandof Irelandtoinclude boththe Northand the South.Thisis particularlynotable in
2. 2
fuel launderingwhichprovidesanopportunityforOCGsto capitalise onthe differenttax ratesbetween
differenttypesof fuel.
Fuel laundering
The highprice of fuel inIrelandhasledtoincreasingillegal activityinthisarea.Criminal actionsinthe
area of fuel have become amajor probleminIreland.Oftenbeenseenasaharmlesscrime bymany
membersof the public,fuel crime hasinfactwiderimplicationsandmanyadverse effects.
Tobacco
It isimportantto recognise the social,healthandeconomiccostof smoking.AtpresentIrelandisone of
the worst rankedcountries(4th) inthe EU in termsof consumptionof counterfeitandcontraband
tobacco. Froma financial perspective,estimates show thatthe losstothe Exchequerisaround€250
millionwhile the industryhasputthe figure at€526 million.
Digital Piracy
Digital Piracyisoftencommunitybasedwithsmall numbersof private individualsmakinggoods,which
were previouslyavailableonlythroughpayment,availableforfree tothe widerpubliconline.The
impactof piracyon the retail sectorissubstantial.The scope of digital piracyincludesarange of
infringementsonIPrights.Itincludesaudio-visualpiracy,software piracyandthe theftof other
electronicallytransmittable IP.
Pharmaceuticals
Falsifiedmedicinesrange fromcompletelyinnocuoustofatal.There hasbeena significantincrease in
the numberand type of illicitpharmaceuticalsreachingthe Irishconsumeroftenthroughillicitentryof
productsvia the illegal internetpharmacysupply-chain.
Strategic Plan to tackle illicittrade
- Understandingthe size andnature of the problem
- Evaluationof the driversof illicittrade
- A balancedandeffectivetax collectionsystem
- Legislationandregulation
- Enforcement
- Educate the public
3. 3
- International co-operation
- Co-operationwiththe legitimate industry
Extractsfromaddressby Minister of Statefor European Affairs,Lucinda Creighton
- IllicitTradingcostsjobandcosts significantrevenue toGovernment.Focusedoperationsare required
to combat illicittrade.
- A one weekconcertedeffortcarriedoutbythe EU managedto close down18,000 websiteswhich
dealtwiththe pharmaceuticals.
- The black economy,rightlyso,isaveryimportantissue forretailers.Itisa growingconcernacrossthe
EU. The scale of fraudisenormous.There are individualsandorganisedteamsexploitingthe
weaknessesof the system.