Inquiry into ‘below-cost’ baby food claims
One-day promotions by both retailers will be examined by Ms Foley after the food giants slashed baby product prices by more than 50%.
The reduced goods included SMA Progress, Milupa, Cow & Gate, Heinz Jars, Hipp Organic Range and Liga Biscuits.
Dunnes cut prices by 61% yesterday, while Tesco reduced their prices by 51% the previous day. Both retailers said there are no definite plans to cut baby food prices again in the coming weeks.
“There is an investigation underway and we will speak to all the parties involved. This is an interesting case and we have identified it as a priority,” said Ms Foley.
The Director of Consumer Affairs has the power to bring a retailer to court if they find evidence of below-cost selling, which is illegal.
The Competition Authority can also take action against major retailers if they abuse their strong position in the market, but the authority hasn’t yet received any complaint on this matter.
A Tesco spokesperson insisted that the firm is not selling goods below cost and said the company always follows grocery laws.
“We make no apologies whatever for reducing prices to consumers, as we have been doing for some time across a wide range of products in our stores. We will continue to lead the way in reducing prices into the future,” the spokesperson said.
Smaller retailers have criticised the controversial promotion, with the grocers group, RGDATA, accusing its bigger competitors of selling below cost.
“Tesco and Dunnes are engaged in macho marketing and abusing their market power,” RGDATA director general Ailish Forde said.
“This is a classic case of two large retailers, with nearly half the market share, using their muscle to put the squeeze on suppliers. Caught in a spat over market share, Dunnes and Tesco are discounting these products to levels that must involve below-cost selling.”
RGDATA fears that suppliers will be forced to shed jobs if these promotions are allowed to continue.
