Micheál Martin (Cork South Central, Fianna Fail)

That is the reality throughout Europe. It is equally important to point out that the Restrictive Practices (Groceries) Order 1987 does not cover vegetables, and when people talk about such matters, how can we blame it? If it were removed next week, it would be convenient for people to blame it for everything that has happened in recent years, which Deputy Sargent has articulated. I am aware of the importance of competition in all sections of the economy and at all levels of markets for goods and services in the State, including the supply, wholesale and retail levels of the Irish grocery market.

The Restrictive Practices (Groceries) Order 1987 contains several provisions aimed at curbing anti-competitive practices such as below-cost selling, so-called hello money and boycotting. The order covers all grocery goods, as well as intoxicating liquor and other household goods ordinarily sold in grocery shops. However, it does not cover fresh fruit, vegetables, fresh or frozen meat or fish. Enforcement of the order is the responsibility of the Director of Consumer Affairs.

Since its introduction, the Restrictive Practices (Groceries) Order 1987 has continued to be contentious and provoke much debate. The most controversial provision in the order is the ban on below-cost selling or, more correctly, the prohibition on selling at below net invoice price, which is really what the Restrictive Practices (Groceries) Order 1987 is. Those who oppose the order argue that this provision prevents retailers from passing on to consumers any discounts or rebates that they receive from suppliers not shown on the invoice. In many respects, the order does not protect suppliers from the demands of retailers, since the latter can demand higher discounts from suppliers, and very often do. There is a lack of transparency in that regard. It is a myth that the order protects suppliers against the big multiples. It does not.

Members will be aware that in March 2005 the Government-appointed consumer strategy group recommended that the order be revoked in its entirety. However, the report acknowledged that there are strong arguments to be made on either side of the debate. For example, listing the arguments that it received for retaining the order, the consumer strategy group noted that suppliers considered that a fair trading environment helped them to increase production and employment in the sector. On the other hand, the group noted the report of the competition and mergers review group which in 2000 stated that "the main case against the groceries order is a simple one: it restricts price competition".

Accordingly, the Government, at its meeting on 3 May 2005, agreed with my proposal to undertake a public consultation process on the future of the order. Advertisements were placed in the national press on 18 May and interested parties were invited to submit their views on the future of the order by the end of July. There was a great response to the consultation process, with 561 submissions received from a wide range of parties, including trade groups, producers, retailers and a significant number from the public. Submissions were also received from producer interests, including the Irish Farmers Association and the ICMSA.

Those submissions have all been considered, and a comprehensive report on the consultation process is being finalised in the Department. I expect that the report will include recommendations regarding what action is appropriate on the order, and I will carefully consider its findings before making recommendations to the Government.

I appreciate that many producers and retailers have strong views on the order and many do not agree with the consumer strategy group's call for its repeal. However, I am also aware that suppliers are already under pressure to reduce costs as a consequence of competitive market forces. That is a fact of commercial life and has little or nothing to do with the operation of the groceries order. The Irish retail groceries sector has changed immensely since the order was introduced 18 years ago, with small, independent operators facing increased competition from the expanding multiples. One significant development in that regard has been the entry of the German discounters, Aldi and Lidl, which have acquired a significant foothold in the Irish market and plan to expand further.

That continued expansion by the multiples has increased competition in the sector, giving consumers more choice than ever before, and I welcome any positive measures that provide additional competition and benefits for consumers. However, I also recognise the continuing important role played by the smaller operators in the sector. I am pleased to see the way that many of the independents and non-multiple groups have responded to that increasing competition by developing their operations.

I am already on record as saying that the retention of the order in its current form is not a tenable proposition as the structure and trading practices of the groceries market have changed very considerably since the order was produced in 1987. However, I assure the House that I will obviously carefully consider my Department's report on the outcome of the public consultation process in detail before I bring any proposals to the Government on the future of the order.

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