Pressure is growing on the Government to repeal the Groceries Order, which prevents retailers from selling packaged food below cost, after a Competition Authority report said the measure is costing households almost €500 a year in forgone savings, writes Arthur Beesley, Senior Business Correspondent.
With the new National Consumer Agency also calling for the order to be repealed, it emerged last night that supermarket group Tesco had entered the debate for the first time with a formal submission to Minister for Enterprise, Trade and Employment, Micheál Martin.
The chain, which is the biggest food retailer in the State, is believed to have called for changes to the section of the order that prevents it from lowering the price of packaged food when it receives discounts from suppliers for buying in bulk.
The Minister will bring a proposal to the Government in the autumn, following a public consultation he initiated after the Consumer Strategy Group called for the repeal of the order.
In its final report last May, the group said Ireland ranked highest in the euro zone for many consumer prices "but does not rank highest" for many business costs.
With Mr Martin already under pressure from TDs within Fianna Fáil, some informed observers believe he will opt to amend sections of the order with primary legislation but not go so far as to repeal it entirely. His precise intentions are not yet known.
Among the 400 submissions received by the department last month were calls for the retention of the order from business lobbies such as the Irish Business and Employers' Confederation, the Retail, Grocery, Dairy and Allied Trades' Association and Irish Small and Medium Enterprise.
Farm lobbies such as the Irish Farmers' Association and the Irish Creamery Milk Suppliers' Association are also understood to have called for the retention of the order, as did the St Vincent de Paul charity.
In one of the first submissions to be made public, the Competion Authority said yesterday that the order was a relic from the era of protectionism, insecurity and weak economic performance. "The Groceries Order is directly costing the average household up to €481 a year (between June 2004 and June 2005). This corresponds to a total amount of €577 million for all consumers," it said.
Authority chairman John Fingleton cited the use of the order in the prosecution of two supermarkets last year for providing discounts on baby food.
"If this logic was applied in other sectors, for example clothes, it would make post-Christmas sales a criminal activity. We are urging the Minister to take the opportunity to remove one of the most anti-competitive and protectionist devices from the Irish statute book."
Informed sources confirmed that the interim National Consumer Agency called for the repeal of the order in a submission that will be published next week. In addition, Tesco's spokesman confirmed last night that the chain had made a submission to Mr Martin. He declined to discuss its contents.
However, other sources indicated that Tesco's document finds fault with section 13 of the order that obliges wholesale suppliers to charge the same price for packaged food to all retailers, regardless of their size.
Although bigger retailers typically receive discounts on bulk purchases at the end of the year, it is illegal under the order to pass on to consumers the discounts they receive for packaged food products.
Tesco has previously indicated to the Oireachtas Joint Committee on Enterprise and Small Business that it had no issues with the order.