Micheál Martin (Cork South Central, Fianna Fail)

The decision to abolish the groceries order was not based on the Competition Authority report nor the consumer strategy group's report but on a comprehensive report prepared by my Department, which was circulated to Deputies at the time. That report stated:

. . . we don't believe that it is possible to predict in any meaningful way the precise extent of such price reductions. Ultimately, that will be a function of a variety of factors including the amount of off-invoice discounts that are available for transfer back to the invoice, the actual level of net margin obtaining in the retail trade currently, and the extent to which resulting competitive forces will drive efficiencies at all levels of the production and distribution chain.

Other extraneous factors, including input costs and consumer demand, also impact on retail prices and make it difficult to isolate the impact of any one factor such as the ban on selling below net invoice price.

That is what the Department stated on the record prior to the decision to abolish the groceries order. The Department's report also showed that over a ten-year period, prices rose by 30% in those EU countries which had restrictions on grocery prices, but only rose by 13% in those countries with no such restrictions.

What we have done is removed a barrier to competition. The market, in time, will have to develop and drive its efficiencies in that regard. I have asked the Competition Authority to examine the issue. If one was to attempt, through legislation, to compel companies to transfer discounts back, which would be extraordinarily difficult, one could develop a system of price fixing, which is illegal and non-competitive. During the debate on the Competition (Amendment) Bill, no meaningful amendment was tabled to put in place a vehicle or mechanism to give effect to such a compulsion. It is simply not possible and it would not be correct to do so.

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