The "balance of power" has shifted unfairly in the direction of big retailers after the lifting of the Groceries Order, according to the Irish Business and Employers Confederation (Ibec).
The ban on selling groceries below their wholesale price was abolished today, after the Minister for Enterprise and Employment Micheal Martin last night confirmed he had signed the order to bring the new Competition Act
The ban was in place since 1987 and has been blamed for making Irish grocery prices among the highest in Europe. Mr Martin claimed that the order kept groceries in Ireland at an artificially high level by allowing suppliers to specify minimum prices below which products could not be sold.
Paul Kelly
However, the new legislation is flawed, according to Mr Paul Kelly, Director of Ibec Division, Food and Drinks Industry Ireland.
The Groceries Order did not just ban below cost selling, Mr Kelly told ireland.comtoday, but also provided for fair trading between manufacturers and retailers.
"The net result is, we are entering a situation where there is going to be, we believe, unfair trading conditions and the balance of power has shifted dramatically in the favour of retailers, particularly larger retailers," said Mr Kelly.
Mr Kelly added that the increase of "buyer power" will lead to a number of smaller retailers going out of business, which will "ultimately restrict the choice that's available to the consumer".
The abolition of the order has also been strongly opposed by RGDATA, the small retailers' association, which agreed that it would lead to reduced choice, reduced competition and an increase in the power of the large supermarket chains like Tesco, Dunnes Stores and Superquinn.
The new Competition Act will contain safeguards to specifically prohibit the fixing of minimum retail prices by suppliers, unfair discrimination in the grocery trade and the payment of advertising allowances. It will also ban the practice of "hello money", where supermarkets force suppliers to pay to get their products stocked on shelves.