Martin moves to lift ban on below-cost food selling

ENTERPRISE Minister Micheál Martin has signalled that the Government may abolish the ban on below-cost selling of food and groceries.

One of the strongest recommendation of the report of the Consumer Strategy Group (CSG), to be published on Wednesday, is for the revocation of the Groceries Order, which forbids below-cost selling by supermarkets and retailers.

In an interview with the Irish Examiner, Mr Martin says that the recommendation will be subject to a three-month period of consultation, which he does not want to pre-empt.

But, in a clear espousal of his own thinking on the matter he refers to the conclusive finding of the CSG that the order is anti-consumer.

"A strong and robust case has been made by the report. Those who don't like it will have to come up with very strong reasons why it shouldn't be allowed," he argues.

"The world today is vastly different to that of the late 1970s when the Groceries Order came in," he adds.

The CSG report reveals that multiple retailers have negotiated long-term discounts with suppliers (up to 18% in some cases) which have not been passed onto the consumer, because of the ban on below-cost selling.

The revocation of the order would be likely to spark a supermarket war, with large retailers such as Tesco, Dunnes Stores and Superquinn discounting heavily on 'loss leaders', products that consumers are known to be price-conscious on.

However, the independent retail sector, manufacturers and suppliers are expected to argue very strongly with Government for its retention.

"The supermarket war will be very superficial with pseudo-competition on loss leaders which will lead to less players on the market," said Ciarán Fitzgerald, director of business sectors with IBEC, yesterday.

"It will damage the food industry, will affect jobs, and will prevent innovation," he said.

"Below-cost selling will mean price increases on other products, or else manufacturers being made pay for the cost of promotions."

Yesterday, Fine Gael's enterprise spokesman Phil Hogan said that the party had highlighted the problem many times on its 'ripoff.ie' website.