Only impact of Groceries Order end was in off-licences - economist

The only "real" impact impact of the abolition of the Groceries Order 18 months ago has been to enable off-licences to sell alcohol below cost, with undesirable consequences socially, economist Jim Power said yesterday.

Addressing the annual conference of the Beverage Council of Ireland, the Friends First economist's comments echoed the policy of the industry lobby.

However, Competition Authority chairman Bill Prasifka urged the council to drop its campaign for the restoration of the Groceries Order for alcohol sales. Speaking to delegates in Killarney, he said such a move would legalise cartel activity.

The Competition Authority opposed the Groceries Order as it facilitated price-fixing by suppliers at the expense of consumers, Mr Prasifka said.

In light of recent criminal prosecutions for exactly this type of activity in the Galway oil and Ford Dealers Association cases, he called on the Beverage Council to change its position and "commit itself to a culture of competition".

Mr Power also said the food industry had been an easy target for Government in the growing clamour over inflation.

"The whole notion of rip-off Ireland is an utter red herring," he said. The State rather than the producers of food had been the driver of inflation in this economy, he told the conference. It was the rise in local authority service charges due to the benchmarking awards, the rise in ESB and other costs, and the rise in general of doing business that had seen inflation increase.

However, Mr Power did warn of an imminent rise in food inflation because of wheat price rises.

On the broader economy, he said the next budget would be more difficult for Brian Cowen to frame than for any minister for finance in over a decade.

Commenting that "a monkey could have managed the Irish economy over the past decade the momentum was so strong", he said there was a much more challenging environment now in terms of managing public finances.

The State was moving into more sober times and consumer confidence was down, Mr Power said, though this had been disguised by the maturity of SSIAs earlier in the year.

The economy was moving to a lower growth path and "the insanity" of the housing market of the past few years would ease. The transition from a housing-based economy had to be carefully managed to prevent a collapse, which he did not expect.

The Beverage Council of Ireland is the representative body for more than 60 companies employing about 6,000 people in a business that is worth more than €700 million in sales each year.

Some 800 million litres of soft drinks are sold here annually.