Below-cost selling order should go, says review group

A slim majority of the Competition and Mergers Review Group has recommended that any new legislation on the grocery trade should not include a ban on below-cost selling.

In its fourth and final discussion document on the Groceries Order of 1987, the group recommended that the order be repealed, saying many of its provisions have been overtaken by the Competitions Acts.

It said opponents and supporters of the ban on below-cost selling agreed the order did "not in fact prevent predatory pricing defined by competition law cases".

"The available evidence in relation to supermarket margins indicates that if large multiples wish to cut prices significantly on selected lines (perhaps provoking a `price war' with other multiples, but severely affecting small independent grocery outlets in the process) they can do so without the necessity to lower the price below the net invoice price," the group said.

The 10-member group, chaired by Mr Michael Collins SC, proposed that any legislation should include provisions requiring retailers to abide by their suppliers' terms and conditions, especially in relation to credit.

It also proposed the continuation of the ban on "hello money", whereby retailers ask suppliers to contribute to the development of their outlets.

These measures were "equally vital to some measure of balance between retailers and suppliers", the group said.

The group added that new legislation should oblige retailers to sell their products to anyone who wants them, including other small retailers. This would "at least diminish the significance" of the ban on below-cost selling in the eyes of those who support the ban.

It continued: "If the removal of the ban on below-cost selling might have the adverse effects on independent retailers, to buy from the large multiples would go a long way to resolving the issue.

"If, on the other hand, opponents of the ban are correct and removal of the ban will have little or no adverse effects on independent retailers and customers, then a clarification that independent retailers can purchase from the large retailers if they so wish may have little or no consequences."

The group will report to the Tanaiste, Ms Harney, after it considers submissions on its proposals, which it has invited. These should be delivered to the Department of Enterprise, Trade and Employment before January 24th.