Mr. Frank Gleeson:

Despite the huge difficulties in our economy and the huge difficulties facing our customers, retailers remain committed to sourcing as many products as possible from Ireland. I will let the supermarket groups themselves tell members about their own programmes and level of commitment to Irish suppliers but in the round, Irish retailers purchase around €5 billion worth of Irish food and drink every year.

This compares to total exports of Irish food and drink of €9 billion. This commitment is not altruistic. Retailers exist only because they sell things that consumers actually want to buy. Irish retailers are very aware that consumers wish to purchase Irish products, without sacrificing the quality or value mentioned. Retailers respond to that desire whenever they can.

As a trade association, Retail Ireland is not allowed to discuss prices or facilitate discussions among its members on the issue. However, it is worth noting a number of facts already in the public domain. The first relates to the trends in grocery prices in recent years. Grocery prices paid by consumers have fallen significantly in recent years. This is supported by official data from the Central Statistics Office. Every month the CSO compiles the consumer price index which collects nearly 20,000 prices of 170 food and non-alcoholic drink products. These figures provide a robust sample size that can be relied upon to give an accurate picture of price trends. They show that food and non-alcoholic drink prices have fallen by 6.3% since 2008. The reason for these price falls is quite simple - consumers have less money. Tens of thousands of us have lost our jobs and those of us lucky enough to have a job have seen cuts in wages. Retailers have had to provide even greater value for money as a result. If they do not, they will not survive and go bust. Prices did increase last year but only by a very modest 0.6%, primarily on foot of higher commodity prices worldwide. Even given this small rise, Irish grocery price inflation was the lowest in the European Union, where prices rose by an average of 3%, and much lower than in the United Kingdom, where prices rose by an average of 3.2%. The rise was also significantly lower than the general Irish rate of inflation which stood at 2% last year.

I refer to supplier relations. I am aware that the committee has in its mind the forthcoming consumer and competition Bill and the enabling provisions that may be contained within it on the issue of retailer-supplier relations. In its submission to the Department of Jobs, Enterprise and Innovation on this subject in 2009 Retail Ireland stated it opposed the type of code of practice published by Mr. John Travers in his consultation document at the time. We did so for several reasons. The rationale for the code has not been demonstrated and the code is not justified by any identifiable consumer benefit. More important, the Competition Authority has already stated that the retail sector is competitive. The code, as presented, would have inhibited legitimate commercial behaviour that benefited the consumer. In addition, the code would add an unnecessary regulatory and cost burden that would ultimately be borne by consumers and retailers.

To provide extra detail, I make the following points. The retail sector is intensely competitive. This is the view of the Competition Authority which in 2009 published its report on the retail related import and distribution sector. On its publication, the chairperson, Mr. Bill Prasifka, stated falling retail prices were proof that competition worked. That report is the most authoritative examination of the Irish grocery market by an impartial body that had full and confidential access to all the facts and all the market participants. It is of note that the Competition Authority did not call in this report or at any other time for a code to govern the retailer-supplier relationship. The then Tánaiste noted at the time of publication that "no major systematic problems in the overall market were identified." The relationship between retailers and suppliers is, without question, a robust, often tense, commercial relationship. Retailers drive hard bargains - they do so because they have to. Value for money for the consumer is vital. However, there is a difference between legitimate commercial behaviour and sharp practice. Retailers do not engage in unfair or illegal practices and if such practices take place, there is already in place a legislative framework to deal with them. As the Competition Authority stated in its submission to the Department in 2009, the Competition Act 2002 already prohibits or prevents the compelling or coercing of payment or allowances for the advertising or display of goods and "hello money" in regard to new or extended retail outlets under new ownership. Its submission goes on to state the provisions of the Act may be enforced by either private plaintiff or the authority. To date, no cases have been brought before the courts under the Act.

I take the opportunity to refer to the ESRI's publication in 2009, "How To Do A Lot of Harm by Trying To Do A Little Good". In the document Mr. Paul Gorecki rightly pointed to the harm that would be caused by the draft code of practice for the grocery sector then being proposed and stated, "The Code is likely to lead to a rise in prices for suppliers with no mechanisms or tests for considerations of consumer harm to be taken into account".

Members of the committee may be aware of developments at EU level in the area of retailer-supplier relations within the multi-stakeholder dialogue which reports to the high level forum on a better functioning food supply chain. That process has seen retailers and suppliers sign up to a set of principles, good practice exemplars and a framework for implementation and enforcement agreed to by manufacturers, wholesalers and the retail trade. The principles of the European code, in summary, are: all agreements should be in writing; unilateral change to contract terms shall not take place unless such a possibility has been agreed to in advance; all agreements should be complied with; information should be exchanged in strict compliance with competition law; all contracting parties in the supply chain should bear their own appropriate entrepreneurial risk; and that there shall be no application of threats in order to obtain an unjustified advantage or transfer an unjustified cost.

Retail Ireland and its members support these principles which provide a framework for doing business that respects contractual freedom and ensures competitiveness, trust and continuity. These characteristics are essential for business development, innovation and economic, social and environmental sustainability and these principles will benefit consumers and wider society. The framework aims to ensure signatories respect the principles and process commitments to integrate the principles with daily business practice. It includes a disputes procedure with a choice of options and offers reassurance to the complainant that he or she will not be subject to commercial retaliation. What is more, the principles are being applied this year. The first tranche of signatories will come on stream in the coming weeks, with more coming on stream throughout the year. At very least, the process should be given the time it deserves to bed down and succeed. We believe the EU voluntary agreement, with the full support of suppliers and retailers, offers the best model for progress. Crucially, it provides an even playing pitch for all retailers and suppliers across Europe. No Irish retailer or supplier is placed at a competitive disadvantage vis-à-visits counterparts or competitors elsewhere in the European Union.

The committee is obviously interested in the well-being of farmers. A national code would benefit neither consumers - as costs would rise - nor farmers, as retailers generally have no direct relationship with farmers. That is a key point for us. Retailers never purchase product directly from farmers; rather, they source product from suppliers and processors. It is these groups with which retailers have direct commercial relationships. The only organisations that would benefit from a national code would be those suppliers and processors in the middle of the supply chain, not the consumers at one end or the farmers at the other. It is vital that this fact is recognised; otherwise the unintended consequences of a code of practice would see large suppliers and processors benefit to the disadvantage of small independent retailers, with no advantage to farmers or consumers. These disadvantages would be coupled with very high compliance costs which would include legal advice on compliance with the code; the appointment of a compliance officer, as well as training and operational costs; buyer training; the maintaining and supply of records as required under the code; and costs arising from responding to queries from any enforcement body. These cost increases would not be sustainable, particularly in the current environment described by Mr. Lynam.

I will now hand over to Mr. Lynam to conclude.