The Competition Authority has urged the abolition of the ban on below-cost selling by supermarkets after Dunnes Stores and Tesco were yesterday convicted of illegally discounting baby foods.
In a robust attack on the controversial Groceries Order, Mr John Fingleton, chairman of the authority, said the prohibition was unfair to shoppers and undermined the competitiveness of the Irish food industry.
"A system that fines supermarkets for reducing prices doesn't operate in the interest of the consumer... If this logic was applied in other sectors - for example clothing - it would make post-Christmas sales illegal," he said.
Tesco and Dunnes were convicted on seven counts of selling baby foods below cost and fined €2,100 each in a District Court prosecution taken by the Director of Consumer Affairs, Ms Carmel Foley.
Both retailers had cut the price of baby food by more than half during 24-hour sales in October. Dunnes has been separately charged with illegal discounting of frozen foods in November in a case that has yet to come before the courts.
Rather than safeguarding consumer rights, such prosecutions undermined competition and were a slight to shoppers who are made to pay some of the highest food prices in Europe, said the Competition Authority.
"The law places the Director of Consumer Affairs in the uncomfortable position of having to protect consumers from low prices," said Mr Fingleton.
"\ also affects the competitiveness of the Irish food sector. Providing a vibrant and competitive marketplace at home is the best way to ensure that Irish companies are in a position to compete in the international marketplace," he said.
Tesco said it was not its policy to flout the Groceries Order and that the below-cost selling of baby food had been an accident. But it defended its policy of price cutting, saying the consumer was the ultimate winner.
In a statement, the company said: "In this case, it seems we reduced the price of seven items of baby food lower than that allowed under the Groceries Order. It was an exceptional and unintentional case."
Dunnes said it would not comment on the ruling.
RGDATA, the lobby group for independent grocers, welcomed the verdict. It noted that the court had rejected attempts by Dunnes Stores to argue that certain categories of goods were outside the scope of the order
Ms Ailish Forde, director general of RGDATA, said: "All these two retailers are doing is trying to increase their dominance, halt competition and reduce consumer choice in the process.
"Today's court decision is very welcome. It shows that Dunnes Stores and Tesco will not be allowed to abuse their market power at the expense of suppliers, competitors and ultimately consumers."
The Government is considering whether to lift the order. A decision is expected after the completion of a review on the prohibition by the Department of Enterprise, Trade and Employment. The Groceries Order was introduced in 1987 following the collapse of the H Williams chain in a price war.
