Seán Sherlock (Cork East, Labour) | Oireachtas source

I thank the Senator for raising this matter. The question posed by her as to whether there are any plans to introduce legislation to tackle higher prices charged by traders in this jurisdiction as compared with prices charged in the neighbouring UK jurisdiction seems to presume that price control measures can protect consumers from what may be perceived as high or unjustified prices. In so far as the general issue of tackling high prices is concerned, price control measures are not an effective means of reducing prices. During the 1970s and 1980s price control was used as one of the primary tools for combating increasing consumer prices and inflation. Various analyses of that period have shown that price control was an ineffective way of tackling high prices, as in many instances maximum prices prescribed for goods very quickly became minimum prices with the result that inflation during that period rose close to 20%. In addition to failing to tackle high prices, price control also effectively acted as a disincentive to businesses becoming more efficient and further prevented justified price rises arising from legitimate cost increases incurred by business. It was for that reason that the Consumer Protection Act 2007 essentially repealed the legislation which allowed for price control and there are no plans to revisit the matter.

As regards differentials in prices for goods in this jurisdiction when compared with prices in the neighbouring UK jurisdiction, there can be legitimate reasons for prices to differ, such as exchange rate movements, different distributional costs, etc. Notwithstanding this, I do not doubt there may be instances where the level of the differential in prices charged for the same goods in the two jurisdictions cannot be justified by reasons such as exchange rate movements. In such instances, it is important that consumers use their discretion. I read the article to which the Senator refers and it is interesting to note a comment made by Mr. Mark Gould of MG Consulting who states:

Everyone is on the web, you can see what a retailer is charging in Britain versus the Republic, so why everyone hasn't responded to that transparency I don't really understand. Retailers that get caught on this only have themselves to blame.

We all have access to the Internet and consumers can exercise their power. Their price sensitivity can determine purchasing behaviour, particularly as it relates to conspicuous consumption.

In contrast to the price control era of the 1970s and the 1980s, Government policy in the area of prices has been focused on the promotion of competition and consumer awareness, given that freely functioning competitive markets are more effective at setting fair prices. In so far as promoting greater consumer awareness of prices is concerned, the Consumer Protection Act 2007 specifically mandates the National Consumer Agency to promote public awareness and conduct public information campaigns on issues such as prices. The agency has been very active in raising awareness of prices in a number of different areas. Evidence available to it shows that consumers are becoming more price conscious and changing their shopping habits to achieve better value for their money. It is the case, therefore, that competition and price awareness among consumers are more effective tools to tackle high prices than the price control policies of the past.

As regards general price trends, the consumer price index published by the Central Statistics Office shows that prices in Ireland rose by 1.2% in the 12 months to January 2013, whereas the corresponding index in the UK, the retail prices index, shows that prices there increased by 3.3% in the same period. At the European level, the harmonised index of consumer prices, which is the accepted measure for comparing price trends across the European Union, shows that prices in Ireland increased by 1.7% in 2012 as compared with an increase of 2.3% across the Union and 2.7% in the United Kingdom in the same period.

I am firmly of the view that consumers, by exercising the power they command, are better placed to ensure they get a fair deal than any legislative intervention that would seek to regulate the prices traders charge for goods and services. Accordingly, by informing themselves as to the different offerings in the marketplace and being strategic in their shopping decisions, consumers can help to ensure they achieve the best value for their money, which is all the more important in the current economic climate.