Price inflation ‘no retail barrier’

THE barriers to competition in the retail food sector identified by Competition Authority chairman John Fingleton are not linked to price inflation, according to IBEC’s Food and Drink Federation.

Mr Fingleton has identified two main barriers to competition: “Two pieces of legislation restrict competition in these areas. The Groceries Order prevents retailers from selling below the invoice cost and thus restricts price competition.

“The Retail Planning Guidelines prevent shops over a certain size from opening, which prevents entry to the market, especially by those retailers who use superior efficiency, scale and innovation to drive prices down.

“The combination of both measures undoubtedly means higher prices and reduced variety for consumers,” he said in an Irish Times article on Friday.

Yesterday, the director of the Food and Drink Federation, Ciaran Fitzgerald said the Competition Authority’s comments fail to highlight the fact that the biggest differences between prices in Ireland and the rest of the EU are in the category of food products such as fresh fruit and vegetables, which are not covered by the Groceries Order.

“The lowest food prices in the EU are in countries that themselves have bans on below-cost selling,” he said.

“Furthermore, the link between the existence of the order and the development of a price gap over the last six years ignores the fact that we have had a Groceries Order in place for 16 years.

“A junior certificate student examining this problem would be instructed to look at other economic factors operating over this period and in particular to look at differences between Ireland and other EU countries,” said Mr Fitzgerald.

Mr Fitzgerald said that given that food inflation at 2.2%, is at the Government target, the Competition Authority should concentrate in areas where there is clearly a problem, such as the services sector and the professions.