An official investigation into business practices at Superquinn has been ordered after Senator Feargal Quinn acknowledged that the supermarket chain sought "support money" from suppliers when opening new stores.
The Director of Consumer Affairs, Ms Carmel Foley, announced an investigation after speaking yesterday to Senator Quinn, who is managing director of the chain. She said she was concerned that a breach of the 1987 Restrictive Practices (Groceries) Order "may have taken place".
The Joint Oireachtas Committee on Enterprise and Small Business is due to discuss the matter next week.
The inquiries follow complaints made to RTE by suppliers to a new Superquinn outlet - opening in Dundalk next week - that the company was seeking "hello money".
Payments ranging from £500 to £5,000 were being sought from suppliers to guarantee shelf space for their products, they said.
Senator Quinn confirmed that Superquinn had sought "support money" and said that he welcomed Ms Foley's investigation. He insisted that it had not acted illegally. "We have sought legal advice and we are sure we are inside the law", he said.
Under the Groceries Order, a retailer seeking a discount or allowance "in consideration of the opening of a new retail outlet" faces a maximum penalty of £1,500 or six months' imprisonment. Ms Foley said that "at the very least there would appear to be a prima facie case to be investigated". She called on suppliers to come forward with information.
The director-general of the retailers' group RGDATA, Mr Michael Campbell, said that the practice amounted to "a £1 million subsidy" for Superquinn's new store. "It's a predatory practice which is threatening to put small retailers out of business."
Senator Quinn claimed that all retail chains sought similar "support". He added: "Everybody does that, and its normal business practice." However, Tesco and SuperValu-Centra said yesterday that they did not operate such a system. Dunnes Stores refused to comment.
Senator Quinn explained that he "personally would have no problem with `hello money' as long as you stay within the law". He said: "I never supported the concept of the State banning negotiations between suppliers and retailers. No other country has such a law. It's anti-competitive and, in the end, the customer loses. Anything we get in terms of discounts are geared at providing lower prices for the first year of business."
He confirmed that Superquinn had established a subsidiary company, Retail Logistics, in order to ensure that it stayed within the framework of the Groceries Order.
He also said that Superquinn would continue to seek discounts from suppliers when it opened new stores. "We have a very clear conscience in relation to this. We look for as much support as we can get in the form of discounts, terms, lower prices or support money, to help coax customers into the shop in the first year."
A number of suppliers contacted The Irish Times yesterday to confirm that support money, bonus stock and discounts had been sought from them. Some, however, said that they had no problem with the practice.