Paddy McHugh (Galway East, Independent)

I wish to confine myself to section 4 of the Bill which proposes to revoke the groceries order. I record my belief that in coming forward with a proposal to abolish the order, the Minister allowed himself to be unduly influenced by the report of the consumer strategy group. This report contained many inaccuracies, which were highlighted by the Joint Committee on Enterprise and Small Business, of which I am a member, in its submission to the Minister in July 2005. I will quote from the submission so that even if the Minister sought to bury it, it will be put on the record. According to the committee's submission:

The Joint Committee met with Ms Ann Fitzgerald, Chairperson of the Consumer Strategy Group, and other CSG representatives on 22 June 2005.

The Joint Committee has concluded that there were a number of misunderstandings and errors in relation to the Groceries Order in the CSG Report.

These include:

1. The CSG stated that Ireland was the most expensive country in the eurozone for food and retail non-alcoholic beverages (page 7).

The Joint Committee's Report found that the Eurostat Price Level Indices Report, (from which the CSG obtained its information):

a) Reflects consumption patterns as well as prices

b) Was a survey of prices in Dublin only (recent surveys by the CSO show that Dublin prices are more expensive than prices outside Dublin)

c) Was undertaken in outlets that may not now be representative of outlets in the Dublin area.

The Joint Committee on Enterprise and Small Business considers that the Eurostat report cannot be regarded as reliable evidence of Irish prices compared with those of other countries.

2. The CSG ignored the recent very low inflation in Irish food prices. Since August 2003, the annual inflation rate has been less than 1%. For the most recent year, the annual Consumer Price Index rate was- 1.4%. These low inflation rates are not indicative of a non-competitive market or a market that needs fundamental regulatory change.

3. The presentation of the prices of international and national brands ... is misleading due to the inclusion of alcohol products without the exclusion of excise duty [These products are rarely bought in a grocery shop].

4. The CSG is incorrect in stating that the Competition Act, 2002 prevents predatory pricing in the Irish grocery trade.

5. The CSG incorrectly assumes that convenience stores account for a much larger proportion of food sales than is the [reality].

6. The CSG Report incorrectly states there is no ban on below cost selling in Germany, Spain and Italy.

7. While the CSG notes the entry of Aldi and Lidl to the market, it does not appear to understand that the entry of [these businesses] was facilitated by the existence of a ban on below cost selling in Ireland. Without the ban, the discounters would have been subject to attack by existing multiple groups. Without the ban, the benefits of the competition from Aldi and Lidl would not have been realised.

The chairperson of the consumer strategy group, during questioning by the Joint Committee on Enterprise and Small Business, appeared to consider that the groceries order could not be amended, with the choice being to retain or revoke it. If the consumer strategy group had been aware the order could be amended by legislation, its recommendations to the Minister may have been completely different. The Minister happily ignored the submission from the Joint Committee on Enterprise and Small Business and instead undermined the committee by accepting a flawed report from the consumer strategy group. He ignored the committee's submissions, which had some very strong input from members of his party. He also decided to ignore that. So much for the Minister respecting the views of his party colleagues.

I also heard the former head of the Competition Authority, Dr. Fingleton, specifically state that the groceries order was anti-competitive and did not facilitate competition in the groceries trade. When Dr. Fingleton was challenged on this, he had no evidence to back up his claim. The Minister's actions in bringing forward this Bill and including the abolition of the groceries order was based on flawed judgment, an inaccurate report by the consumer strategy group and a fresh air view of the Competition Authority based on nothing.

Why does the Minister feel he has to meddle in this matter? It is something which is working well and serving the public. His actions will lead to the largest and greediest players putting small community-based operators out of business.

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