Jerry Cowley (Mayo, Independent)
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Question 436: To ask the Minister for Enterprise, Trade and Employment when consumers here will see the promised reduction expected from the abolition of the Groceries Order; if his Department established a group to scrutinise this; and if he will make a statement on the matter. [38539/06]

Micheál Martin (Cork South Central, Fianna Fail)
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The Groceries Order was abolished primarily because it allowed wholesalers and suppliers to determine minimum retail prices charged to consumers, thereby seriously constraining price competition in the grocery trade. During the time the Groceries Order was in force more than 2,000 small independent retailers went out of business resulting in the grocery trade in Ireland becoming more concentrated in the hands of fewer participants.

The combined impact of these events was to create a floor under the retail price below which groceries could not be sold. This resulted in Irish consumers paying more for their groceries than would otherwise have been the case. However, 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 question, I never predicted price reductions resulting from the removal of the Grocery Order nor did I predict any period of time over which such reductions might be expected to occur. On the other hand I am on record as saying all along that I expected prices to be lower in the future than they would otherwise be had the Groceries Order remained in force. CSO figures are consistent with this view, particularly when grocery price inflation is compared with overall inflation. The Consumer Price Index for October shows that the prices of products previously covered by the Groceries Order fell by 0.7% in the seven-month period from April to October while during the same seven month period, prices of products not covered by the Groceries Order rose by 1.5%.

The overall impact on all groceries prices (Groceries Order and Non Groceries Order items) is a decrease of 0.2% in the same seven-month period. 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.

Following the enactment of the legislation which abolished the Groceries Order, I asked the Competition Authority to review and monitor developments in the grocery sector in light of the new regulatory environment. I am anxious 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 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. Since removal of the Order, the Competition Authority has received no complaints of anti-competitive behaviour in the sector, nor has it seen any evidence of such behaviour.

The Authority's monitoring of the sector is on going but I understand they believe it is too early to reach any conclusions. In April 2007, one year's worth of data will be available for analysis and I understand the Authority intends to publish, later in 2007, an analysis of developments in the grocery sector focusing on pricing trends, market structure and barriers to entry. Thereafter further analyses will be published annually for as long as necessary.