Blatantly anti-competitive behaviour by large supermarket chains should be investigated by the Competition Authority as a matter of urgency, according to a report from the Oireachtas Committee on Enterprise and Small Business.
The report, drafted by Fine Gael Senator Paul Coghlan, analysed the development of the retail sector in Britain in recent years and the role of planning, predatory pricing and the treatment of suppliers in the retail sector in the UK.
Senator Coghlan said last night that the UK authorities had asked their Competition Commission to investigate allegations that grocery multiples were abusing their market dominance and he said the Oireachtas Committee was concerned that similar abuses may be taking place in Ireland.
"I have just completed a report on the UK grocery trade which has identified anti-competitive behaviour by the major grocery multiples. This report records there is clear evidence of price-fixing by large retailers in the UK, as well as price-flexing, in which small retailers are forced to pay more for the same products. The dominance of major multiples in the UK market has resulted in the closure of 2,760 small shops in the past four years.
"The Competition Authority in Ireland must now launch its own investigation into competition in the retail grocery sector, particularly since some UK retailers are major operators in the Irish market. In particular, the authority should use some of its extensive powers to obtain information on turnover and profitability which have been used effectively by its equivalent in the UK, but which have not been used in Ireland," he said.
Some of the other key recommendations in the report are that: n The Competition Authority should examine the extent to which large multiple retailers have bought up large banks of land in particular locations in order to prevent competitors entering the market;
n A prohibition on the enforcement of restrictive covenant by retailers who leave a particular site, preventing another food store from opening at the old location;
n The reform of planning laws to ensure to take place so that competition in the groceries trade is addressed when considering planning applications;
n A census of local retailers by the Central Statistics Office to give an overview of the market;
n A Revenue Commissioners' examination of the extent to which multiples are manipulating transaction costs to reduce any value added tax liability;
n Greater transparency in the grocery sector to force multiples to disclose information on turnover and profitability with legislation to compel disclosure if necessary.
"As well as evidence of price fixing by multiples in the UK, my report has noted evidence of price flexing. This occurs where a multiple retailer takes a large order from a particular supplier on condition that the supplier makes other retailers pay more for the same product," said Senator Coghlan.
"Consumers have a right to a wide range of goods at the lowest possible prices."
