PROPOSALS FOR a supermarket ombudsman would push up food prices, put shop staff out of work and lead to a resurgence of cross-Border shopping, some of the country’s leading retailers say.
Tesco, Superquinn and Lidl all staunchly oppose Government plans for a code of practice to curb the power of big retailers and suppliers and to appoint an ombudsman for the sector.
In contrast, the main farming bodies and representatives of suppliers and manufacturers back the proposals. Their comments are made in submissions published on the Department of Enterprise and Employment website.
The code was drafted in response to allegations of malpractice in the grocery trade, including claims of large under-the-counter payments and the bullying of suppliers by powerful retailers, who have denied the claims.
Most of the 29 submissions received by the department support the plans and say a statutory code, rather than a voluntary one, should be introduced. Ibec sub-groups Food and Drink Industry Ireland (FDII) and Retail Ireland take mutually opposing stances on the proposal, with FDII for and Retail Ireland against.
The National Consumer Agency is supportive, while the Competition Authority, with which it will shortly merge, is opposed.
The largest Irish retailer, Tesco, said no credible evidence had been put forward to show the need for a code. “The case for the creation of an ombudsman has not been made, and we fail to see how consumers or indeed the industry as a whole would benefit from the creation of such an office,” chief executive Tony Keohane said.
The grocery industry could not bear the additional costs of a code or ombudsman, he said.
The Tesco submission pointed out that 60 per cent of purchases by Irish supermarkets are from large suppliers such as Unilever, Procter Gamble and Kellogg’s, which are often as big or bigger than the retailers they deal with.
It said a code would add significant costs to the industry, inevitably push up retail prices and adversely affect consumers.
Superquinn described the proposed code as a “tax on groceries” which would not benefit the consumer and was likely to lead to higher prices. Its chief executive, Simon Burke, warned that retailers would reduce costs in their business if the odds were tilted towards suppliers, with the risk of job losses. “It does not seem to us to have any great merit to seek to protect jobs in one part of he food industry at the expense of jobs in another.”
Lidl said it shuns the payment of “hello money”, and does not charge suppliers “a cocktail of hidden charges”. It rejected the proposed code and accused suppliers’ groups of having a “protectionist mindset”.
FDII said if the “unsustainable imbalance” in relationships between retailers and suppliers continued, thousands of food jobs would be lost and Ireland’s reputation as a “food island” would be lost.
In its submission, the Irish Cattle and Sheep Farmers’ Association called for a prescribed price margin for farmers for food they produce. This would, for example, restrict retailers to selling milk at no more than 2.5 times the price paid to farmers, compared to a multiple of six as at present.
The Oireachtas committee on enterprise and employment has told the department a statutory code should be introduced that is “workable and capable of achieving results”. Former Forfás chief executive John Travers is finalising the code. The Government plans to introduce it initially on a voluntary basis.
