War of words over retail sector competitiveness

THE Competition Authority clashed with retailers yesterday over the best way to bring down consumer prices, as Ireland looks set to become the most expensive state in the eurozone.

Competition Authority chairman John Fingleton said he favoured lifting the ban on below-cost selling and bringing in larger stores in order to give consumers the option of lower prices.

But the small retailers and grocers umbrella group RGDATA opposes the moves, claiming that the experience in other countries has shown that hypermarkets do not bring prices down in the long term.

The row comes just a day after the Government advisory body Forfás published a report showing that Irish prices are 12% higher than the EU average.

It also said that Ireland may soon be the most expensive eurozone country.

Tánaiste Mary Harney is reviewing the 1987 Grocers Order, which bans below-cost selling, and the Retail Planning Guidelines, which limit the size of food and hardware outlets.

The Competition Authority has lobbied the Tánaiste to drop the ban on below-cost selling because they believe it will bring competition into the market that will force existing retailers to drop their prices.

There is no ban on below-cost selling on most perishable goods here, and the supermarket’s own brand name products are also exempt, meaning that a small group of retailers control prices, Mr Fingleton said.

“If we followed the RGDATA argument then Ryanair would never have been allowed into the airline market and consumers would not have benefited from the drop in prices there,” he added.

But RGDATA says that experience in other countries has shown that hypermarkets bring down prices initially, and when they have blown all other competition out of the market, they hike them up again.

The hypermarkets have the resources to do this because they can put a squeeze on suppliers to give them bargain prices, and then give discounts on selected items, RGDATA director general Ailish Forde said.