Ms Karen O'Leary:

My colleague, John Shine, and I would like to thank the committee for the opportunity to contribute to it today and we hope to make a productive and positive contribution to its ongoing deliberations. I intend to outline the statutory remit and role of the National Consumer Agency and to provide some information on our previous work and activities relevant to the grocery sector.

The National Consumer Agency is the independent State body with responsibility for the enforcement of consumer law. As a statutory body, our remit and functions are established by law, principally the Consumer Protection Act, 2007. This Act, which transposed the EU unfair commercial practices directive is a maximum harmonisation directive, which means it limits our functions to the relationship between traders and consumers acting outside of their business trade or profession. We carry out our functions within this context - which is somewhat different to how the Competition Authority carries out its functions. Our mission is to protect consumers and to help bring about a situation where they are empowered to make well-informed decisions in fair and competitive markets. We have a clear statutory mandate to serve and represent the interests of consumers.

Since our establishment in 2007, the environment for consumers in Ireland has been transformed by the financial crisis and subsequent economic difficulties. The impact this has had on consumers and their spending patterns has been dramatic, across all sectors, including the grocery sector. I will expand on this point later.

In summary, the work of the National Consumer Agency can be described as promoting consumer welfare by enforcing consumer law and advocating on consumer issues. We provide a one-stop consumer information and education service via our websites, consumer helpline and public awareness activities. We also have specific responsibilities in regard to the safety of consumer products and personal finance information and education. As I mentioned, our statutory remit and focus is exclusively on the experiences of consumers in Ireland. Therefore, we have no role in the business to business or supply chain relationship.

The National Consumer Agency has a broad mandate and remit and an ever-increasing number of consumer issues compete for our resources. We must, therefore, make choices in regard to what we do and how we do it in order to be effective. Our decision-making is based on an assessment of consumer detriment and identifying where we can make the greatest impact. Given the option of two competing issues, we prioritise the issue where we will have the best opportunity to mitigate the most consumer detriment. We gather information through our direct contact with consumers. Our consumer helpline received over 58,000 contacts from consumers last year. We also acquire knowledge through our systematic market monitoring programme, direct market surveillance activity, media reports and information received from other agencies in Ireland and across the EU.

The frequency and speed at which new issues arise requires us to be flexible and to react quickly. Information is then evaluated and processed to identify the source and size of the problem, in particular the scale of consumer detriment, primarily financial, but not exclusively, and whether a potential breach of consumer law has occurred. Our subsequent interventions are evidence based and are focused on the areas where we can make the greatest impact. They often involve a number of complementary approaches across three pillars of activity, enforcement, advocacy and information-education for consumers.

In cases where there is a potential breach of consumer law, a more formal process is required and we take into account the likely detriment experienced by consumers, the nature of the evidence that is available, whether additional evidence needs to be gathered, previous trader behaviour and any past actions, possible motives and the level of knowledge of the trader. We may look for voluntary compliance where that is the most effective and efficient approach or use disruption to interrupt a practice where formal enforcement may take too long or cost too much. However, in situations where formal enforcement action is appropriate, we will not hesitate to act and we have a number of options available.

Our mandate is broad in that it crosses various sectors in which consumers operate, including the grocery sector. As with all sectors, one of our main objectives is to ensure price transparency. Consumers should know the price of a product or service before they buy it. This is important so that consumers can make informed decisions. It also helps to foster competition as consumers can use this information to choose where they take their business, which encourages businesses to compete with each other. We carry out compliance blitzes to ensure that traders are complying with pricing legislation. In 2012, we carried out visits to 349 traders nationwide, including a significant number in the grocery sector. We also investigate complaints from consumers to establish if there are breaches of the Consumer Protection Act and if enforcement action should be taken.

We carried out eight surveys on grocery prices between 2007 and 2011. In our last survey, we found high levels of price matching among the four major grocery retailers. In other words, the difference between the prices charged for branded products across the board was very low.

We also found that competition seemed to be focused on special offers and promotions as opposed to price. The National Consumer Agency has consistently called for a focus on everyday low pricing as a consumer-focused alternative to the "hi-lo" pricing associated with special offers and promotions.

Our most recent market research in the grocery sector, conducted in November 2012, found that almost half of all shoppers have made changes to their grocery shopping practices in order to reduce costs. The main change indicated, by over 62% of those who made changes, was that they now shop around for better value. Other changes include buying less, budgeting better, switching provider and changing brands. Over three quarters of those surveyed, 79%, indicated that these changes have reduced the amount they spend on groceries. Consumers have responded to changes in their own circumstances, as well as responding to the behaviour of retailers. Developments in the pricing behaviour of retailers have included an increase in price promotions, higher levels of price matching and development of own-brand ranges.

We focus our efforts where there is clear consumer detriment. We ensure that businesses adhere to pricing legislation and work to increase price transparency in sectors where such transparency is lacking. In the grocery sector, consumers have access to pricing information and can compare prices, should they wish to do so. In 2007, on average, consumers spread their shopping over two and a half stores. By 2013, on average, grocery shoppers are spreading their shopping over three stores. That is a 20% increase and clearly shows that consumers are less loyal and are more open and willing to change store should they believe that better value is available to them.

In its invitation, the committee mentioned two specific areas that I will now address. The first is the impact to the consumer on depleting produces, such as liquid milk. This is essentially a matter of supply and demand, where reduced supply will likely lead to less choice and increased prices to consumers if there is no reduction in the level of demand for the product. We would always advocate, where possible and relevant, for choice to be available to consumers to ensure that there is sufficient competition in the market in respect of price and quality of product. CSO consumer price index figures for May 2013 show that the cost of whole milk has decreased by 0.6% over the previous 12 months. However, it has been noticed that there has been an increase of between 5 cent and 10 cent per litre between May and June 2013. Increases had not been seen in the price of milk for a considerable period of time prior to this.

The second specific topic which the Committee asked us to address was the impact of further consolidation of the grocery sector. The National Consumer Agency has no direct remit in the matter of business consolidation, other than advocating for adequate competition in the marketplace to ensure that consumers are empowered and can make well-informed decisions in fair and competitive markets. However, we note that there have been some contrasting developments in this area in recent years. The acquisition of Superquinn by Musgrave and the decline in the numbers of small, independent retailers has occurred at the same time as the rapid expansion of two new entrants, Aldi and Lidl. Therefore, while there has been consolidation in some areas of the market, new entrants have brought a valuable alternative to consumers, to which they seem open.

New retail planning guidelines were introduced in 2012 and we made a submission to the Department of Environment, Community and Local Government when it was reviewing earlier RPGs in 2010. The recommendations we made at that time on facilitating competition stated that it is more desirable to have the emphasis focusing on promoting increased competition, rather than maintaining the status quo, which may play to the strengths of incumbents and deter new market entrants who could potentially be more efficient. The latest RPGs state that the preferred site for new developments is in the city or town centre. If this is not possible, then edge-of-centre locations may be considered. Only if this is not possible, out of town development may then be considered. We note that this sequential approach and its development limitations have had the effect of constraining the type of grocery retailer that can trade in an area. This limits the range of goods they can offer and influences the price point at which they can operate, all of which may undermine the competitive environment and deny consumers choice and value in the retail market.

How consumers behave in response to changes in the market should not be understated. Consumers are now increasingly open to new offerings. They are reacting to market changes in their best interests; they are in effect playing the system to their advantage. The National Consumer Agency’s view is that there is a place for all retailers to compete for the benefit of consumers.

In conclusion, I would like to reiterate our strategic priorities and their relevance in the grocery sector. We protect consumers by enforcing consumer law. This includes price display legislation and in 2012, we pursued 520 complaints in price display and misleading pricing. We empower consumers to make informed decisions. It includes improving price awareness and transparency in markets where consumers find it hard to make informed decisions. This does not appear to be the case in the grocery sector at this time, where consumers have access to pricing information and their behaviour indicates that they are increasingly aware of the alternatives available to them. We also represent consumer interests, advocating and intervening on significant issues of consumer detriment.

Finally, I thank you for the opportunity to address you today and my colleague and I are happy to take any questions you may have.