Written answers

Wednesday, 1 April 2009

Department of Enterprise, Trade and Employment

Consumer Protection

9:00 pm

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 44: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the extent to which she has evaluated the mark up in respect of some consumer goods on sale here which indicate a price difference inconsistent with that charged in adjoining jurisdictions both inside and outside the eurozone, in view of the fact that these are not necessarily arising from higher wage, energy, currency fluctuation or other costs here; if checks have been carried out which might indicate price mark ups in excess of 100% even after allowing for the extra costs that might be incurred here; and if she will make a statement on the matter. [13404/09]

Photo of Liz McManusLiz McManus (Wicklow, Labour)
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Question 52: To ask the Tánaiste and Minister for Enterprise, Trade and Employment her views on the Forfás report published in December 2008, which found that while retail costs are higher here, this differential could not account for the significantly higher prices being charged for many key consumer goods here; and if she will make a statement on the matter. [13355/09]

Photo of Jack WallJack Wall (Kildare South, Labour)
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Question 54: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the steps she will take to require retailers to explain price differentials in view of her recent address to the Checkout conference; and if she will make a statement on the matter. [13356/09]

Photo of Martin FerrisMartin Ferris (Kerry North, Sinn Fein)
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Question 76: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if cross-Border shopping has increased since the beginning of 2009; and if she will make a statement on the matter. [13401/09]

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 91: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if she has sought or received assurances from all supermarkets operating here that the prices charged are competitive and comparable with those charged by the same stores in all other European jurisdictions keeping in mind cost differences; and if she will make a statement on the matter. [13744/09]

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 92: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if the prices charged in supermarkets here compare favourably with the prices charged by the same supermarkets in other jurisdictions notwithstanding currency or other cost differentials; and if she will make a statement on the matter. [13745/09]

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 93: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the exploitation of consumers here by some chain stores which appear to charge prices that are not comparable with those applicable in other neighbouring jurisdictions, notwithstanding some higher costs here; and if she will make a statement on the matter. [13746/09]

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 94: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the action she has taken or proposes to take to ensure that the consumer here receives the benefit of lower commodity prices; and if she will make a statement on the matter. [13747/09]

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I propose to take Questions Nos. 44, 52, 54, 76 and 91 to 94, inclusive, together.

The House will be aware that the issue of the differentials in prices between this jurisdiction and Northern Ireland and the UK has been a matter of concern for some time. These concerns stem from the widespread belief, particularly amongst consumers, that the benefits of the Euro's appreciation in value against Sterling are not being passed on by way of lower prices in the shops. This belief has been copper-fastened by a number of cross border surveys undertaken by the National Consumer Agency. These surveys found that in some instances customers in the Republic were being charged up to 31% more than customers in Northern Ireland in respect of certain grocery products and up to 51% more than consumers in the UK in respect of a selection of clothing, homeware, maternity/nursery and electrical goods.

Given this level of price differentials, it is not surprising that this is giving rise to a leakage of trade across the border which is having consequential impacts on employment, business activity and consumer confidence. It is difficult to say what the precise level of this leakage is. The House will be aware, however, that my colleague the Minister for Finance recently published a joint report from the Revenue Commissioners and the Central Statistics Office regarding the implications of cross border shopping for the exchequer. The report, in acknowledging the significant difficulties in sourcing data regarding cross-border shopping, nevertheless estimated the value of cross border shopping to be in the region of €350 million to €500 million in 2008 and that if exchange rates were to remain close to current levels this could increase by €100 million to €150 million in 2009. It is clear, therefore, that the level of cross border trade is significant.

In the light of these concerns, I initiated an engagement with the retail sector to ascertain the reasons why the benefits of the Euro's appreciation were not being passed on to consumers. In the course of this ongoing engagement, I have met with the various links in the retail chain including retailers, suppliers, distributors and manufacturers. Different and indeed conflicting reasons have been proffered as to why prices in this jurisdiction are higher than in the Northern Ireland and the UK. Prominent among these reasons was that the cost of doing business in Ireland was significantly higher than the cost of operating in the UK. Accordingly, I requested Forfás to carry out an analysis of the relative cost of doing business in a number of locations in the Republic, Northern Ireland and the UK. Forfás' analysis, which was published late last year, found that whilst the cost of doing business was indeed higher in this jurisdiction, the extent of this additional cost would only justify a differential of 5-6% in prices between the south and the north. It is clear, therefore, that operating costs, whilst somewhat higher in this jurisdiction, do not account for the current level of price differentials.

Aside from operating cost considerations, there is considerable disagreement among the different elements of the retail chain as to reasons for the north south price differentials. In my meetings with retailers, they have strongly contended that the costs to retailers of sourcing goods in Ireland is significantly greater than the costs of sourcing such goods in Northern Ireland and the UK and that the current structure of the wholesale and distribution cost base in Ireland is preventing the benefits of the Euro's appreciation in value from being passed on to consumers.

Suppliers and distributors on the other hand have contended that there is a significant imbalance in the relationship between retailers and suppliers which is giving rise to suppliers being squeezed by the increasingly difficult demands being made by retailers. In this regard, I recently requested the Competition Authority to carry out a study of the retail import/distribution sector as to how competition is working in the sector and whether any practices or methods of competition are affecting the supply of goods and services in that sector. I expect to receive the Authority's report of its findings by the end of April.

The Government for its part is strongly of the view that it is not acceptable that the benefits of the Euro's appreciation of approximately 30% in value over sterling is not being passed on by way of lower prices to consumers. It is incumbent upon all links in the retail chain to play their part in ensuring that there is the greatest degree of transparency possible as to reasons for the current north south price differentials, particularly given their possible impact on the national economy in terms of loss of employment, loss of trade, loss of revenue to the exchequer and loss of value to the consumer. It is my intention, therefore, to continue to pursue this issue with the retail sector to ensure that Irish consumers receive a fair deal and value for money when doing their day to day shopping.

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