Ban on below-cost selling retained by Harney

The Government has decided to retain the ban on below-cost selling that prevents supermarkets severely undercutting smaller retailers. The Cabinet yesterday approved a package of competition measures brought forward by the Tanaiste, Ms Harney.

The measures included renewing the Groceries Order, which prevents retailers selling goods for less than they pay suppliers for them. Introduced in 1987, the order effectively puts a limit on the extent to which supermarkets can compete with each other and small retailers on price.

The Competition Authority had sought the abolition of the order because it believes it is not good for competition and keeps food prices artificially high. A top level competition review group set up by the Tanaiste also supported the abolition of the ban on below-cost selling.

"I have come to the view that it is not in the consumer's interest to remove the ban on below-cost selling at the present time. I am particularly concerned that below-cost selling could be used to eliminate competition in local markets," said the Tanaiste yesterday.

"Of course, the groceries sector is changing very rapidly and I will keep the position under review in the light of developments," she added. IBEC, the business lobby group, welcomed the decision. Mr Ciaran Fitzgerald, the director of the organisation's Food and Drink Federation, said the decision showed the Government accepted that the Groceries Order was good for competition in the retail sector.

"The order protects small grocers but it is also good for the indigenous food industry as a whole because it allows it the scope to develop branded products," he said. IBEC has argued that small indigenous brands would not survive against the cut price own-brands that supermarkets could introduce in the absence of the Groceries Order. RGDATA, which represents small retailers, said the decision would benefit retailers, suppliers and consumers. "The Irish grocery market has never been more competitive and today's decision ensures that fair competition will continue to prevail," said Ms Ailish Forde, the director general of RGDATA.

The Competition Authority declined to comment last night. A number of other recommendations made by the Competition and Mergers Review Group will be incorporated in new legislation that will update the existing mergers and competition acts, the Tanaiste said. The new Competition and Mergers Bill will give additional powers to the Competition Authority. Responsibility for examining and deciding on mergers and takeovers will be transferred from the Tanaiste to the authority and will be determined on the basis of competition criteria alone.

The Tanaiste will retain responsibility for mergers and takeovers in the media industry. Ms Harney has accepted the group's recommendation that public interest criteria as well as competition criteria should be taken into account in the case of media mergers. Control of media operations by means other than the acquisition of shares and assets will now come within the scope of merger law. A spokeswoman for the Tanaiste said last night it was not clear at this stage if the legislation would apply retrospectively or to ongoing arrangements such as that between Independent News & Media and The Sunday Tribune.

Competition enforcement will be strengthened by a number of changes including protection for "whistle blowers" who make complaints or furnish information in good faith to the Competition Authority.