Dept of Agriculture told not to warn supermarkets off vegetable price wars

The new Competition and Consumer Protection Commission has warned the Department of Agriculture against asking supermarkets not to engage in Christmas vegetable price wars.

Minister for Agriculture, Food and the Marine Simon Coveney was questioned on the issue in the Dáil recently and said Tom Hayes, the junior minister in his department, had been told by supermarkets they would not run promotional campaigns this Christmas.

Last year Lidl, Aldi and Dunnes Stores were selling some produce, including carrots, onions, potatoes and sprouts, for as little as 5 cent a kilo.

They said they were covering the cost of the promotion but the Irish Farmers’ Association (IFA) claimed farmers were being forced to take the hit and staged multiple protests over Christmas week.

The National Consumer Agency merged with the Competition Authority this year to form the Competition and Consumer Protection Commission.

In a letter to the Department of Agriculture, Dr John Evans, head of competition enforcement, said he was aware of a response by Mr Coveney to a parliamentary question from Fianna Fáil's Eamon O'Cúiv.

Mr Coveney said Mr Hayes “had been assured by the individual supermarkets that they would not run a promotional campaign for fruit and vegetables in the lead to Christmas 2014”.

Dr Evans said an article in the Sunday Business Post "also suggested that Minister Hayes held meetings with Aldi, Lidl and Tesco and had also spoken to Musgrave by phone in relation to this matter".

Detrimental

He said the commission was concerned “any assurances or agreements” between the department and supermarkets “may result in anti-competitive effects that are detrimental to consumers, particularly those from vulnerable socio-economic groups.

“This is because they seem likely to deter supermarkets from engaging in promotional activity to the benefit of households, who frequently find themselves under increased financial strain during the Christmas period,” he added.

The commission has also written to a number of supermarkets on the issue and, while the Department of Agriculture does not fall under its remit, Dr Evans said “any agreement or concerted practice whereby undertakings such as retailers coordinate their prices is one of the most serious forms of competition law infringements, which the commission has a statutory duty to investigate”.

No evidence

He said there was no evidence last year of farmers being “coerced into selling vegetables at unsustainable prices”.

Speaking to The Irish Times, Mr Coveney said he would not comment on the letter, but said he was "perfectly within my rights to ensure that food isn't used as a tool in below-cost selling to act as some kind of loss leader in supermarkets.

"I think that devalues a high-quality product that is produced in Ireland and I don't look kindly on it when that happens. It is nothing to do with trying to influence the competitive market or anything like that. It's purely my view that retailers should not be selling food for half nothing in an effort to drum up business.

“The competition commission will do their job in making sure there is competition among retailers but I have got a job to do as well, which is to make sure the food that is produced in Ireland isn’t used and abused as a tool or a vehicle to act as a loss leader in the retail outlets.

“That’s what happened last Christmas. I think retailers accepted the point we were making, that we have a reputation in Ireland for producing very high quality, safe, sustainably-produced food.

“I still don’t think that is the type of precedent I’d like to see set and, I think, as Minister for Food, I am entitled to make that comment and that judgment.”