Tánaiste orders inquiry into supply chains in retail sector

 

TÁNAISTE MARY Coughlan has ordered the Competition Authority to investigate supply chains in the retail sector amid claims that wholesalers and/or retailers are profiteering on imported goods.

Surveys have shown that groceries in the Republic are at least 30 per cent dearer than the UK, while the margin on non-grocery items is up to 50 per cent.

Retailers have been accused of failing to pass on savings from the fall in sterling to Irish consumers but in turn they have blamed suppliers for the mark-ups.

With the EU Commission declining to get involved and consumers still flocking across the Border to buy cheaper goods in the North, Ms Coughlan has now asked the Competition Authority to carry out a study/analysis of retail-related importation and distribution channels.

In a letter to the head of the Competition Authority, Bill Prasifka, Ms Coughlan said the study should examine how the sector operated and how competition operated in the sector.

The Tánaiste has also asked for an investigation of “whether any practice or method of competition affects the supply and distribution of goods” within the sector.

Ms Coughlan, who is also Minister for Enterprise, Trade and Employment, says the study should consider the impact on competition within the sector of direct importation from source countries, rather than indirectly through the UK.

Last December, Forfás, in a report on the relative costs businesses face in Ireland and the UK, found that that operating costs in Dublin were 25 per cent higher than in Belfast.

However because supply costs accounted for the vast majority of costs in a business, the overall difference in the cost base between the two cities was just 5-6 per cent, much lower than the difference in retail prices.

In her letter, Ms Coughlan cites the Forfás report and its call for a review to assess whether lack of competition was stopping consumers benefiting from the weakness in sterling.

The Tánaiste also referred to the call by the European Commission for consumer protection authorities to monitor potentially unfair commercial practices in the food sector.

Last month, Ms Coughlan suggested that she could introduce price controls on some goods if retailers failed to pass on the retail differential to customers.

However, this met with a mixed reception from consumer and retail groups.