Mr. Paul Brophy:

In response to Deputy Barry about below cost selling. The cost of production is a separate issue. The supermarkets take a product that has been invoiced to them at between 75 and 80 cent and sell it for 39 cent. That simple act undermines our livelihoods and those of the small shops which have only a certain amount of products to dilute the effect of the promotions whereas the big supermarkets have thousands of items. They use the promotion to catch footfall. It is a very simple equation. It is selling something below the invoiced cost. There is no science to it. That is wrong. Section 9 of the OECD guidelines for competition state they should conduct "all their activities in a manner consistent with applicable competition laws, taking into account the applicability of the competition laws of jurisdictions whose economies would be likely to be harmed by anti-competitive activity on their part".

Deputy Ó Cuív’s description of the hourglass was perfect. There is a narrow band of buyers that can select and use whatever strategy they like and play one of us off against the other. We deal with a fresh product and do not have the option of moving it into many different outlets. The tradition of promotions developed many years ago to offload surplus product such as strawberries or tomatoes when they came in as a flush. We all bought into the strategy because we did not have the refrigeration facilities to keep product fresh for longer. This has developed on the back of big businesses devising a simple strategy to undermine small, unbranded products. I can guarantee they would not touch a strong brand and I will not mention any names. They never appear in these super-sixes. They pick us off as individuals and use products that are freely available in Europe, and do three to four promotions a year, two of which will fall into a grower’s season of production. They do not give the opportunity to produce for that promotion, not that anybody would because due to variables such as weather one could miss one’s mark. There is a six-week lead-in, which is not enough time. It takes 20 to 25 weeks to produce my crop. I cannot gear up with a six-week lead. The product goes fivefold in sales in the week it is sold. One cannot fill it, so foreign product comes in to supplement it. People who have overbought are left with a mess a week or two later when they go off it.

An example of the other collateral damage is if my neighbour is selling something that competes on the shelf with my product. Customers buy two packs of my product that week and ignore my neighbour’s product, which affects him, whether or not he is in the promotion cycle. The wholesale market is even affected. The year they did the super sixes at Christmas, when all the supermarkets followed one another like sheep, the people who depended on the traditional wholesale market in Smithfield could not sell their product because the canny traders in Moore Street went into the local discounters, bought the products off the shelf, sold them on their stalls and made more money than if they had bought the product in the wholesale market. The collateral damage was even wider because people who were not affiliated to the supermarket trade got caught in the crossfire. It is a huge abuse of market dominance.

The Competition Authority blocked the sale of Aer Lingus to Ryanair on the basis that it would not be good for the country. This is not good for the country in the long term, economically or socially. It will wipe out small businesses. My payroll is over €1 million a year. What is the spin-off from that to the local economy? The people I employ go into local shops, even the ones we are giving out about, and spend their money there. We buy our inputs locally. This has a huge ripple effect. While it may be small in the context of the IFA overall, as an employer and cash value business it is a huge issue.

Below cost selling is simply selling something below the invoiced price. It has nothing to do with the cost of production. My cost of production is different from other people’s cost of production, depending on scale. They might have the advantage of being small and nimble but we have other competitive advantages having scale.

The cost of production really has nothing to do with this as this is a case of selling something for less than one has paid for it. Only the big players can do that because they have the footfall and the other products with which they can catch back the money.