Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 61: To ask the Minister for Enterprise, Trade and Employment his views on the recent survey which has indicated an increase in the price of grocery products; and if he will make a statement on the matter. [18563/06]

Micheál Martin (Cork South Central, Fianna Fail)
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I am aware of recent media reports referring to a survey indicating that the cost of grocery goods has increased. There are many inputs into the final price paid for grocery products by consumers, including many outside our control. I note that the Central Statistics Office has identified high fuel prices, the introduction of higher interest rates by financial institutions and increased transport costs as some of the main contributory factors to recent price increases.

The market will take some time to adapt to the changed legislative environment in the grocery trade and I have asked the Competition Authority to monitor the sector following the repeal of the groceries order on 20 March 2006. The authority is putting in place a monitoring mechanism to track data and trends over the coming months and years. While the authority is undertaking this project in accordance with its independent statutory functions, it has agreed to meet various players in the grocery trade to inform the process.

I expect the removal of the groceries order to stimulate competition and drive increased efficiencies at all levels of the distribution chain from which consumers will ultimately benefit.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Does the Minister accept that the survey carried out recently by www.shoppingbill.com is a clear reflection of what is happening in the grocery trade, where everyday items such as eggs, butter and tea have become more expensive in the past six weeks? Contrary to popular belief, all evidence suggests that grocery prices will continue to rise rather than fall. In view of the statements made by the Competition Authority that the average household would save €500 per annum if the groceries order were abolished, a report accepted by the Minister, I ask him to indicate the changes to the Competition (Amendment) Act that are necessary to ensure that discounts and rebates are passed on to consumers rather than being pocketed by large supermarkets.

Micheál Martin (Cork South Central, Fianna Fail)
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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.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The Minister knows that the commitments he made are not being honoured with regard to prices in the grocery trade. The Minister stated at the launch of his report in November: "We want to make it very clear that the existence of the order maintained an upward pressure on prices and we would argue that its removal will ensure that there is a downward pressure on prices". Prices have risen so obviously we did not get it right. The Minister's views may not be shared by everybody with regard to how we should tackle this issue. Everybody wants to see the benefit of any squeeze being put on small suppliers passed on to consumers. Such a squeeze is happening now more than ever because of the lack of protection for such suppliers in the Act and the lack of interest the Minister displayed in banning predatory pricing. We are now in a situation where there is less choice and less diversity, and, according to the first survey since the groceries order was abolished and the new Act was enacted, basic household products, such as eggs, butter and tea, have increased in price.

We are not getting it right with regard to ensuring that the consumer gets the benefit of repeal of the order. Fine Gael tabled an amendment, which the Minister chose to ignore, as is his prerogative, to ensure that savings, discounts and rebates would be passed on to the consumer. The Minister chose differently and now the large supermarkets like Tesco and Dunnes Stores will reap the benefit of any squeeze on suppliers in terms of higher margins and profitability.

Will the Minister accept that an amendment to the Competition (Amendment) Act is required to ensure that consumers get the benefit of the repeal of the groceries order and that it is not, as some commentators have suggested, simply a question of consumers sending e-mails to Dunnes Stores and Tesco?

Will the Minister examine the Casual Trading Act? The Act was identified as a mechanism through which local producers could sell local produce fresh to a local market place in every town and village. Changes to the Act may have to be considered because it is in operation ten years, since 1996. It is a separate issue through which we could have another means of getting fresh grocery products to the marketplace in localised areas to the benefit not only of producers but also of consumers.

Micheál Martin (Cork South Central, Fianna Fail)
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I find the Deputy's position illogical. By implication, he attempts to suggest for political reasons that removing a legislative mechanism which put a ceiling below which people could not sell——

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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That is what the Minister stated.

Micheál Martin (Cork South Central, Fianna Fail)
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——has facilitated the increase in grocery prices.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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We see the result of what the Minister did.

Micheál Martin (Cork South Central, Fianna Fail)
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It is an illogical position to adopt. The Deputy and the world outside know that a multiplicity of factors are involved, such as oil price increases.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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There was no problem when the Minister was introducing the legislation.

Micheál Martin (Cork South Central, Fianna Fail)
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I did not interrupt Deputy Hogan. If the price of a barrel of oil continues to increase at the rate at which it has over the past 18 months, does the Deputy seriously suggest that it will have no impact on prices? It would be foolish to suggest it would not.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The Minister should read his own contributions.

Séamus Pattison (Carlow-Kilkenny, Labour)
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We must proceed to the next matter.

Micheál Martin (Cork South Central, Fianna Fail)
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We are clear about what we stated.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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I have it here.

Micheál Martin (Cork South Central, Fianna Fail)
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It kept prices artificially high. If one examines the countries which had an equivalent to the restrictions of the groceries order, prices increased by 30% over the ten year period——

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Whose view is that?

Séamus Pattison (Carlow-Kilkenny, Labour)
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We must proceed to the next question.

Micheál Martin (Cork South Central, Fianna Fail)
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——whereas in those countries with no restrictions, prices only increased by13%. Our food prices increased by three times that of the UK.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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What about the casual trade?

Séamus Pattison (Carlow-Kilkenny, Labour)
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We must proceed.

Micheál Martin (Cork South Central, Fianna Fail)
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The bottom line is that we removed a barrier to competition——

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The Minister failed to reduce prices.

Micheál Martin (Cork South Central, Fianna Fail)
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——and that was the right thing to do. The Deputy's colleague, Deputy Bruton, was an advocate of removing the groceries order for a long period.

Séamus Pattison (Carlow-Kilkenny, Labour)
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We must proceed to the next question.

Micheál Martin (Cork South Central, Fianna Fail)
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Deputy Hogan is trying to play the electoral game with one foot in one camp and the other foot in another camp.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The Minister would not dream of doing that.

Micheál Martin (Cork South Central, Fianna Fail)
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He does not know where he is on the issue.

Séamus Pattison (Carlow-Kilkenny, Labour)
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We must proceed to the next question. We are over time.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Will the Minister accept that his action contributed to higher prices to consumers? Regardless of what anybody else advocates, his action has contributed to higher grocery prices.

Micheál Martin (Cork South Central, Fianna Fail)
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Which action? Is Deputy Hogan serious?

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Yes.

Micheál Martin (Cork South Central, Fianna Fail)
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That is illogical.