The Competition Authority is thought to be contemplating legal action in response to a plan to rationalise the beef industry.
The plan, being overseen by Enterprise Ireland, is designed to reduce capacity in the sector by closing a number of plants. However, the Competition Authority fears this will lessen competition in the domestic market and may seek to block the plan unless it is substantially altered.
The Enterprise Ireland plan, being drawn up with the industry, calls for the closure of a number of plants. Those leaving the industry would be compensated by a fund set up by the remaining players, who in turn would look for a commitment that those leaving would not re-start production. State aid would be available to ensure existing plants met the highest standards.
There are more than 40 beef slaughtering plants processing in excess of 1.6 million cattle a year.
Under the proposals, it is believed that seven plants would be permanently closed initially- including some currently not in operation - with further closures in a second tranche.
The plan has been in discussion since 1999, when a report undertaken by McKinsey consultants called for a cut in capacity, to leave a smaller number of significant players to compete successfully in international markets.
The thrust of the report was supported by a Government-appointed Beef Industry Task Force, but there has been disagreement on how the scheme would be operated and funded.
Last December in the Dáil, the Tánaiste, Ms Harney, referred to a study of the proposed deal by the Competition Authority. Subsequently, the authority has had discussions with the industry players, but is believed to have concerns about the mechanism to reduce the number of players and the proposed monetary transfer to those leaving the industry.
The authority may formally threaten to seek an interlocutory injunction to stop the plan going ahead if it is not reassured that the plan will safeguard competition in the home market.
Neither the Authority nor Enterprise Ireland would comment on the issue yesterday.
