Ruairi Quinn (Dublin South East, Labour)
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Question 107: 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 in the Republic of Ireland; and if she will make a statement on the matter. [19840/09]

Mary Coughlan (Donegal South West, Fianna Fail)
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The issue of the differentials in prices between this jurisdiction and other jurisdictions such as 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.

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 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 received the Authority's report on the 30th April and I am examining its findings.

The Government for its part is strongly of the view that 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 the reasons why Irish consumers continue to pay significantly higher prices for certain consumer goods, particularly given the possible impact of these price differentials 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.