Report to advise end to ban on below-cost selling

The Government's consumer policy group is to recommend that the ban on below-cost selling of groceries be dropped in a bid to cut food prices.

The Consumer Strategy Group - set up by the Tánaiste, Ms Harney, last year - plans to recommend that the Government drop or radically overhaul the Groceries Order, which bans retailers from selling certain foods for less than their wholesale cost.

The recommendation will be contained in a report to the Tánaiste's successor as Minister for Enterprise, Trade and Employment, Mr Martin, which is due later this week or early next week.

The group's chairwoman, Ms Ann Fitzgerald, refused to discuss the report yesterday. However, a number of sources predicted that it would recommend getting rid of the order, or completely diluting the ban's impact on prices.

"We'd be fully confident that the group will recommend abolishing the order," one source said. "But there is a possibility that it will call for reform rather than abolishing it, but that would still be to reform it so that most forms of below-cost selling are allowed."

The Department of Enterprise, Trade and Employment did not comment yesterday. A spokeswoman said that the Minister had yet to receive the report.

However, speaking at a Checkout magazine-sponsored conference on retailing in Dublin yesterday, Mr Martin indicated that the strategy group's report would deal with the order.

"Obviously, all the group's recommendations will have to be carefully considered before I bring any proposals to the Government on the matter," he told the conference.

A number of bodies, including the National Council on Competitiveness, the Competition and Mergers Review Group, the Competition Authority and the Organisation for Economic Co-operation and Development, have called for the order to be lifted.

On the other side, independent shopkeepers, food producers and growers have all called for the ban to be maintained.

Another speaker at the Checkout conference, Ms Tara Buckley, director general of retail group RGDATA, said there was no evidence that the order contributed to higher food prices.

"In fact, products not covered by the order have experienced higher inflation in recent years than those covered by the order," she said.

Ms Buckley said that abolishing the order would allow large multiples such as Dunnes and Tesco to use predatory pricing to force smaller independent operators out of business, which in turn would limit competition and consumer choice.

The order has been in force since 1987, when the then Government introduced it after the old H Williams supermarket chain was brought to its knees in a price war between Dunnes Stores and Quinnsworth.

The order only covers food and does not apply to fresh produce. Last year, both Dunnes and Tesco were convicted of below-cost selling of baby foods.