Bernard Durkan (Kildare North, Fine Gael)
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Question 63: To ask the Minister for Enterprise, Trade and Employment the extent to which he has monitored food prices since the abolition of the minimum prices order; if the trend is as anticipated or otherwise; if the consumer has benefited as a result of the abolition of the order; if small retailers or the multiples have gained appreciably in terms of market share in the intervening period; if so, the extent to which they have gained; if discounts are being passed on to the consumer; and if he will make a statement on the matter. [23653/06]

Micheál Martin (Cork South Central, Fianna Fail)
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I presume the question relates to the recent abolition of the Groceries Order. The Groceries Order was abolished because it allowed wholesalers and suppliers to determine minimum retail prices being charged to consumers, virtually eliminated price competition in the grocery trade, resulted in more than 2,000 small independent retailers going out of business in a fifteen year period, and caused the grocery trade in Ireland to become more concentrated in the hands of fewer participants. The combined impact of these events was to create a floor price below which groceries could not be sold and this resulted in Irish consumers paying more for their groceries than would otherwise have been the case.

The Groceries Order was in existence for a period of 18 years and it fundamentally altered the structure and composition of the grocery trade. It is simply unrealistic to expect this process and the damage caused by 18 years of the operation of the Order to be reversed in the space of 3 months. I do not think we should expect to see fundamental changes in market share, for example, in the short term.

Recent inflation figures suggest that grocery prices have increased since the Order was removed. However, suggestions that such increases are as a result of greater competition following the removal of the Order, or that the removal the Order has failed in its objective, are a nonsense and do not stand up to scrutiny.

There are many factors which impact on the price of groceries in our supermarkets. The lack of competition caused by the Groceries Order was only one such factor. Others would include production costs, labour costs, interest rates, overheads, international exchange rates and so on. Because of this, and despite the implication in the Deputy's question, I never made any predictions as to the likely extent of price reductions resulting from the removal of the Order or as to the period of time over which such reductions might be expected to occur.

If we are looking for explanations for rising grocery prices, do not blame the removal of the Groceries Order. On the contrary the removal of the Order will undoubtedly counter other inflationary pressures.

I think consumers are already seeing early benefits with one multiple recently announcing their intention over coming months to implement reductions in the prices of products previously covered by the Groceries Order. The real benefits however will be felt over time, as price competition re-emerges at retail level in the trade thus reversing the 18 years of damage done by the Order.

The removal of the Groceries Order will stimulate competition, drive increased efficiencies at all levels of the distribution chain and eliminate the fixing of minimum retail prices by suppliers. This will create a downward pressure on grocery prices from which consumers will benefit.

I have asked the Competition Authority to closely monitor this process — not least to ensure that the benefits of removing the Order are not thwarted by the emergence of other anti-competitive practices. That is why for example the Competition Act 2006 prohibits practices such as resale price maintenance, which were institutionalised by the Order. It would be very damaging to consumer interests if such practices were to emerge within the grocery trade in another guise.

My officials have had some preliminary discussions with the Authority in this regard and will meet them regularly as the process develops. I have also asked the Authority to report periodically on the results of their monitoring and to make any recommendations they consider appropriate in the light of their findings.