State watchdog 'strongly advises' against price controls, says Varadkar

Taoiseach Leo Varadkar said the advice also points out that plans for price controls in Spain were abandoned because it would have an impact on smaller retailers. Picture: Gareth Chaney/ Collins Photos

Taoiseach Leo Varadkar has said the State’s competition watchdog has “strongly advised” against introducing price controls.

It comes as junior minister Neale Richmond has called an emergency meeting and will hold discussions with the retail forum today amid soaring food and grocery costs.

The meeting comes at a time when grocery price inflation exceeds the general inflation rate of 6% and it is expected to drop further.

However, food inflation is close to 13%, according to the CSO and over 16.6% according to data analytics, Kantar.

Speaking during Leaders’ Questions in the Dáil, Mr Varadkar said that the Competition and Consumer Protection Commission (CPCC) has issued preliminary advice to the government and said it has not seen any evidence to suggest that an emergency or market failure exists in the retail grocery market or that price controls would benefit consumers.

But the advice does note the recent price rises have had a significant impact on consumers.

Mr Varadkar said the advice also points out that plans for price controls in Spain were abandoned because it would have an impact on smaller retailers, particularly in rural areas.

The paper also outlines that there is a lack of evidence to show controls introduced in France and Greece have helped consumers, the Taoiseach said.

Tesco to drop bread prices 

The Taoiseach faced pressure again in the Dáil on Wednesday from Opposition parties who have called on the government to do more than “wag the finger” at supermarkets.

It comes as Tesco Ireland announced that it would cut the price of its own brand bread by 10c.

From Thursday, Tesco own brand 800g white sliced pan will now be priced at 89c, down 10c from 99c, and corresponding reductions will apply to all other Tesco own brand sliced pans.

Natasha Adams, CEO, Tesco Ireland said: "It’s been an incredibly tough year for many of our customers, and we have been determined to try and alleviate that pressure.

"We are extremely conscious of the cost of living challenge being experienced by our customers, which is why we are moving to reduce the cost of another daily staple.

"Following our reduction in butter and retail milk prices in recent days, we are investing in bread retail prices to help customers with their household costs."

From Thursday, Tesco own brand 800g white sliced pan will now be priced at 89c, down 10c from 99c, and corresponding reductions will apply to all other Tesco own brand sliced pans.

On the CCPC advice, Mr Varadkar said: “In the advice they caution strongly against the introduction of price controls.

“[They] point out, for example, that in Spain proposals to do so were abandoned because of the impact that it would have on small retailers and retailers in rural areas in particular that require higher margins to get by.

“The lack of evidence that where it’s been done in France and Greece that it has actually helped consumers and also the unintended consequence that if you control some prices, other prices that are not controlled then get put up even more.” Mr Varadkar said the Government expects prices to moderate or come down soon and Mr Richmond would give retailers this message today.

Social Democrats leader Holly Cairns said Dunnes, Lidl and Tesco Ireland won’t publish their Irish profits. She said Aldi in 2021 published their profits which showed Aldi ireland was 71% more profitable in 2020 than its British stores.

Ms Cairns said it’s obvious some companies are “milking it” when it comes to increased energy prices. She said the government seems “unwilling or unable to do anything” and has been “politely” asking energy companies to reduce their prices for months but they are “ignoring” the government.

Mr Varadkar said the government is engaging with the retail forum and has already introduced measures to help struggling households. He said the government use the proceeds of windfall tax and the proceeds of the special dividend which has been imposed on the ESB for example, to help families in the Autumn with their bills.

Sinn Fein leader Mary Lou McDonald called on the government to publish the advice by the CCPC. Mr Varadkar said it’s up to Business and Trade Minister Simon Coveney to do so.

Speaking earlier at an Oireachtas committee, Minister Coveney said the government is "not happy" about the increasing cost of food and he expects to see reductions in prices as inflation falls.

"That's why the Government asked the retail forum to meet today," Mr Coveney said.

"They will meet again in six weeks, and I do expect to see progress."