Households to save up to €1,000 a year on shopping

IRISH households will potentially save up to €1,000 each year from today’s Cabinet decision adopting Enterprise Minister Micheál Martin’s forthright recommendation to abolish the Groceries Order which bans below-cost selling.

While the Competition Authority (CA) has estimated the average family will save €481 per year if the order is dropped, consumer champion Eddie Hobbs last night said it could work out at "closer to a grand a year" in savings on groceries for many families.

Pointing out that the CA tends to err on the side of caution, Mr Hobbs whose Rip Off Republic TV series galvanised public opposition to the Groceries Order said there would be a potential 20% saving on the price of three-quarters of all goods currently covered by the order

"The actual amount will be purely a function of competitive forces of the market. It will take a while to happen and may take a maverick move from one of the multiples to force a 'pass-through' (reductions) for consumers," he said.

Mr Hobbs described this morning's anticipated Cabinet decision as a "very good and very pragmatic result". He also praised the Enterprise Minister for "resisting a sustained lobbying campaign from Irish retailers and producers, as well as from the backbenches of his own party".

"Micheál Martin has taken a lot of stick in other areas," he said. "But you must remember this is the guy who brought in the smoking ban. I was confident that he was the right guy in the right spot at the right time to see this through."

Mr Martin's proposals, circulated last week, reject all the arguments advanced for retaining the ban. In so doing, they strongly accept the cases made by the CA and by the National Consumer Strategy Group.

Both bodies became involved in a long-running row over the order with the Irish food and retail sectors.

In giving the go-ahead today, the Government will bring in legislation to give the CA new powers to prevent predatory practices or abuse of dominance in an unrestricted market.

It will specifically prohibit 'hello money' practices by supermarkets where the producer has to 'buy' display space. Unfair discrimination and retail price maintenance (setting a minimum price for goods) will also be outlawed. Predatory pricing has been prohibited since 2002.

The need for legislation will mean that the changes will not take effect until early next year.

Mr Martin's proposals conclude that analysis supporting the retention of the Groceries Order does not stand up to scrutiny.

In particular, the argument that the absence of the order has led to 'ghost villages' in Britain is rejected out of hand. Some 90% of people in Britain live within 4km of a shop, it is argued, and the convenience or 'symbol' (Spar, Centra etc) sector is thriving there.