Customer loyalty key in changeover to euro

Ireland is now entering into a crucial phase in the preparation for the euro, which is one of the most significant developments in Irish economic policy since Independence. While a large part of the focus has been on the implications for Government, for industry, for the banking sector and so on, there is another major group - consumers - who cannot be left out of the equation. As Minister of State for Labour, Trade and Consumer Affairs, I will be taking a particular interest in ensuring that the interests of consumers are taken fully into account in the changeover from the pound to the euro, which comes into existence on January 1st, 1999. However, euro notes and coins will not be introduced until January 1st, 2002.

I believe it is more than likely that we may see a transformation in business practices with cross-border mergers, new consumer loyalties based on price and quality (aided strongly by the development of cross-border trade on the Internet) and, no doubt, many other developments which will emerge over time. I very much welcome the growing sense of excitement in business and among individual consumers at the prospects and the opportunities the euro will offer for all of us.

I do not believe that the euro represents a threat to businesses but it does offer them a challenge: maintaining customer loyalty will depend on meeting the needs of their customers in a situation of increased price transparency throughout most of the European Union.

I do not share the pessimism expressed by some commentators that the introduction of the euro will lead to price increases, although I understand why they might have such concerns. During the transition period, consumers should be vigilant and armed with the necessary information on the euro. Since the abolition of the price control system in the 1980s, the policy of successive Governments has been that strong competition and well informed consumers are the best way to ensure that prices are kept down. That continues to be the policy but I intend to ensure that there is no "information deficit" as far as consumers are concerned.

I believe that a national code of practice on dual pricing will substantially boost consumer awareness and will contribute to the further development of a healthy climate of competition in the retail trade. The code will be complemented, where necessary, by additional codes dealing with particular sectors. The code will incorporate the European Commission's recommendations on dual pricing and dual display and will require that dual displays of prices be unambiguous, easily identifiable and clearly legible. It will form a vital part of my Department's strategy to protect consumers in the changeover process.

The retail sector will, of course, want to provide their customers with the necessary information to change over successfully to the euro. Indeed, I expect leading retailers to play a significant role in championing this process.

The office of the Director of Consumer Affairs commenced work in December 1997 with an IBEC working group to draw up a code of practice in relation to the introduction of the euro in the area of food retailing. That code has been completed and provides a useful start. The national code will build on the work which has already been done and will cover such issues as pricing policy, information, monitoring and compliance. Work on the code is progressing in the Department of Enterprise, Trade and Employment and the office of the Director of Consumer Affairs and it is my intention to publish the code in the autumn.

There will be full prior consultation with social partners such as the Consumers' Association of Ireland, IBEC, SFA, ISME, etc.

When the code has been published, my Department and the office of the Director of Consumer Affairs will work closely with the Forfas EMU Business Awareness Campaign and with the Euro Changeover Board of Ireland - on which my Department and the office of the Director of Consumer Affairs are represented - to ensure that it receives maximum publicity.

Tom Kitt is Minister of State for Labour, Trade and Consumer Affairs.