Ned O'Keeffe (Cork East, Fianna Fail)

I am disappointed that a broader view has not been taken on this on my side of the House. Yesterday I heard the Minister of State make the point that there is a significant number of consumers. That does not make the case to amend the legislation. The consumer will lose out in the short term. The problems in the UK have not been recognised here. The report on the groceries order has many flaws and can be rubbished significantly but it is the basis for change in the legislation.

The consumer will lose out because cartels will operate in the food industry. The two finest indigenous food production counties are Monaghan and Cavan, which the Ceann Comhairle represents, and they will also be losers. The Danish food industry is in major trouble because of the cartoon issue, which is regrettable. Danish products have been taken off the shelves in the Middle East and flown back to Denmark at a major loss to Arla Foods, the major food manufacturer in Scandinavia. Some of these products found their way on to Irish shelves last week, which led to the withdrawal of Irish and British products because they were being sold at a higher margin. This is what will happen to the detriment of small domestic producers and the food industry, which is a relatively small player in the European Union.

Large multiples will be the way forward. Since I took an interest in this issue, I have been unable to cope with the number of telephone calls and newspaper cuttings I have received. Countryview, a British magazine, recently published an article under the headline, "Time to protect small shops from supermarket dominance". The reporter, Joanna Baker, stated: "A stronger code of practice to protect supermarket suppliers, together with the need for an independent retail regulator and a moratorium on any further supermarket mergers and takeovers, were just three of the recommendations MPs made in the 'High Street UK 2015' report...". Today's Financial Times carries a story under the headline, "America's shoppers get selective" in which it is stated, "Consumers are adopting a pick-and-mix attitude towards supermarkets. Tesco and Wal-Mart take note...".

The groceries order report states Germany, which has the lowest food price inflation of the 15 member states, does not have a ban on below cost selling but this is false, as such a ban is in place. The report makes no distinction between symbol groups and multiple stores. The owners of symbol stores are independent retailers who voluntarily link to a symbol group. The symbol group relationships can be broken, generally with three months notice. It is false to only examine the sales of the symbol wholesaler and not to take into account that these are independent retailers, each making his or her own decisions on how they operate their stores. Independent retailers have a higher market share outside Dublin and prices outside Dublin are consistently lower than those in the capital, according to the CSO. In other words, prices are cheaper in rural Ireland than in Dublin because we have the market.

The report states that in the period since 1996 the rate of inflation in Ireland has been three times that in the UK and almost twice the EU average. This is misleading and, in isolation, gives a false picture of Irish inflation vis-À-vis UK inflation. UK food inflation is higher. Another study should be undertaken and the report should be rewritten. The report claims that the countries with a ban on below cost selling have the highest rate of inflation, which is also false. It fails to mention that, according to the EUROSTAT price level indices, a number of the countries with a ban on below cost selling have the lowest food prices in the EU.

The report rubbishes claims that seven out of ten villages in the UK have no local shops, yet the statistics clearly demonstrate this is the case. More than 70% of towns and villages with up to 1,000 inhabitants have no local shop. Villages such as Rathcormac, near Fermoy, and Kildorrery in my constituency had five or six shops but they are no more, even though each has 1,000 inhabitants on the electoral register. This is a serious scenario. The Department's report quotes an Office of Fair Trading report which has since been withdrawn and a new report is being prepared.

The Department's report fails to mention that the entry of Aldi and Lidl to the Irish market was facilitated by the existence of the groceries order. Without the order, Dunnes and Tesco would almost certainly have targeted the products being sold by Aldi and Lidl for below cost selling activity with a view to eliminating these discounters before they gained a significant market share. On predatory pricing and abuse of dominance, the report recommends that the existing provisions of the Competition Act 2002 should deal with predatory pricing. The report acknowledges that the Competition Act 2002 can only deal with cases where the retailer has a share of 35% of the market or more and that none of the retailers have this level of market share. Nevertheless, it argues that the Competition Act 2002 can provide a safeguard for independent retailers against predatory pricing. This is obviously false. In addition, the report gives the impression that the Competition Authority has been represented on abuse of dominance cases. The Competition Authority has not forwarded files to the DPP on such investigations and no company has been prosecuted for abuse of dominance. There is no reason to believe the authority will change this stance in the future.

Competition between firms is important. Firms comprise individuals who manage and operate them. The report makes no attempt to analyse competition with respect to the ambitions of the market participants.

See this speech in context