Inquiry into competitiveness in retail sector suggested

An inquiry into the impact of the Grocery Order and the Planning Development Act on competitiveness in the retail sector was among a number of initiatives recommended in the report.

Consultants PricewaterhouseCoopers, who conducted the study for Forfás, said it threw up a number of issues meriting further examination. These included the levels of competition for the supply of services in Ireland, the case for the deregulation of the pub sector, factors underpinning the high cost of unprocessed foodstuffs in Ireland, and the competitiveness of the supermarket/retail structure.

The consultants noted that the Irish retail structure was characterised by a low density of hypermarkets.

"Evidence from other countries with small populations suggests that the retail planning guidelines which constrain the size of retail sales areas is acting as an effective constraint in this regard."

In relation to the pub trade, they said, the "upshot" of restrictive licensing laws was that "in a time when demand for services has been growing at unprecedented rates, the number of pubs has remained static".

The consultants noted that their brief, together with the uniqueness of the euro changeover situation, limited the extent to which they could make meaningful recommendations for policy change. However, they said, the competition issues merited examination.

They also said they did not recommend further research be carried out into alleged "euro profiteering".

This was on the basis that: "(a) regardless of the volume of research resources committed to this task, a number of factors mean that it may be impossible to prove, beyond doubt, that euro-profiteering took place, and (b) there is very little that could be practically done to penalise those committed of having profiteered during the changeover". Rather, they said, the focus of their recommendations "is on ensuring that the market for consumer goods/services in Ireland is sufficiently competitive going forward to ensure that the potential for such behaviour does not present itself again".

Responding to the report, Forfás chief executive Mr Martin Cronin said it highlighted the need to bring the rate of increase in prices and pay into line with other euro zone countries.

"The rapid growth of our economy has led to accelerating growth in pay and prices. We should not allow this to become a wage-price inflationary spiral which would ultimately threaten employment and incomes through undermining the competitiveness of Irish industry and reducing the attractiveness of Ireland as a location for foreign investment."

Mr Cronin also stressed the need to consider how the level of competition in the supply of services could be increased.