Unions and Ibec unite to back Groceries Order

Business lobby Ibec and the Irish Congress of Trade Unions (Ictu)have adopted the same stance in support of the Groceries Order in submissions to Minister for Enterprise, Trade and Employment Micheál Martin, writes Arthur Beesley, Senior Business Correspondent.

While Ictu claims that those seeking the order's retention are more representative than the Consumer Strategy Group and the Competition Authority, Ibec claimed that calls for its repeal were based on "flimsy arguments".

The business lobby rejected as "deeply flawed" the strategy group report which found that Ireland ranked highest in the euro zone for many consumer prices, but did not rank highest for many business costs.

"The report fails to provide relevant data or analysis of food price inflation in Ireland and this undermines its conclusions," IBEC said.

The lobby said the strategy group was wrong to state that that there was only limited competition in the grocery sector and said the arrival of discounters in the trade was proof that the sector was highly competitive.

"If the Consumer Strategy Group is truly concerned about the lack of competition, it has only to look at the UK, where there is a real problem and where, incidentally, they have no ban on below-cost selling."

Stating that a "nation of shopkeepers" in Britain had been replaced by plcs, the submission said rural shops were closing at a rate of 300 per year because people had no option but to shop at out-of-town superstores.

"Consumers in the UK are worse off as a result of the model of retail development that has developed there," it said.

But Ibec claimed the order did not result in higher food prices and said Ireland was among 10 states in the original 15 EU members to ban below-cost selling.

"The relevance of the order in today's environment is highlighted by the fact that Germany introduced its ban as recently as in 2000 and the Dutch are actively considering similar legislation."

Ibec said that its analysis of the official Central Statistics Office figures showed that Irish food price inflation has been significantly lower than general inflation since the order was introduced in 1987.

"In fact, food inflation has been falling over the past number of years with 2004/05 levels actually negative, leading to one of the lowest levels of food inflation in Europe."

An Ictu spokesman said its submission sought to highlight likely job losses that would follow the repeal of the order.

"Not only are we looking at potential job losses in smaller family-owned businesses, but it could also have adverse affects for manufacturing business in Ireland," he said.

"We would agree with the points made by the charities that it would affect those on lower incomes in the medium to longer term.

"Ultimately, we believe it would create greater monopolies, which is hardly competitive."

He went to say that the likely closure of small retailers would lead to a "mall culture" and an erosion in the quality of life in towns.

"There are actually a lot more groups and body of opinion in favour of retaining it.

"There are only two organisations who are calling for its abolition, the Consumer Strategy Group and the Competition Authority. The groups calling for its retention are far more representative of Irish society than the two bodies who oppose it."