An end to the ban on below-cost selling would not benefit the consumer and could cause serious damage to small communities, the independent shopowners' organisation RGDATA warned today.
An upcoming Government report has made a number of recommendations aimed at benefiting the consumer including the repeal of the Groceries Order.
RGDATA director general Tara Buckley said there is no evidence to suggest below-cost selling leads to lower overall costs. Repealing the measure would put the consumer at the mercy of large multiples which would discount staples such as bread an milk to bring customers through the door and make the loss back on the price of other products, she said.
"Many small grocers would be driven out of business thereby reducing competition and limiting consumer choice," Ms Buckley told ireland.com.
"These theories are put together by ivory-tower economists who have no evidence to support their claims. The ban doesn't hinder competition. There is huge competition in Ireland already with, for instance, discounters coming in and capturing 5 per cent of the market."
She noted that one of the few countries in the old EU 15 that allows below-cost selling is Britain where an economic study entitled Ghost Town Britainfound that 70 per cent of villages have no shop.
The experience of France and the United States also pointed to social decay resulting from multiples establishing a high level of market dominance, she said. "This is also about a choice we have to make about the communities we live in."
The Government has already committed to a consultation process with relevant parties before deciding on whether to revoke the Order.
The Irish Timestoday revealed details of the Government-commissioned report by the Consumer Strategy Group due to be published in two weeks, which concludes that high prices cannot be justified by the cost of running a business in Ireland.
"The price gap - which is particularly noticeable in internationally branded goods - is not easy to justify," the report says.
Apart from the end to the ban on below-cost selling, it contains a number of recommendations including:
- liberalisation of alcohol licensing laws
- a more powerful independent consumer watchdog
- restructuring of transport regulation
- changes to pharmaceutical pricing methods
Minster for Justice Michael McDowell is to introduce legislation liberalising licensing regulation with a view to encouraging what he calls a "café society" in Ireland.
The report says restrictions on alcohol licensing have driven prices up and does not provide for consumers' developing tastes.
Fine Gael claimed today the report proves their long-standing contention that Irish consumers are being ripped off.
Trade & employment spokesman Phil Hogan said: "This issue cannot lie unaddressed any longer. The Government has ignored consumer rights to the extent that Ireland is now tied with Finland as the most expensive country in the euro zone."
He said the Government should support the party's Consumer Rights Enforcer Bill that went before the Dáil last year. He supported the report's proposal for a well resourced, powerful watchdog with responsibility with a wide-ranging ambit and powers.
"This agency will be an advocate for consumers, standing up for their rights and promoting consumer power," he said. The Government is expected to act on this recommendation. An annual budget of €8.5 million and 80 staff has been mooted.
The report also recommends incentives for pharmacies and GPs to make use of cheaper generic drugs whenever possible.
It also says that the function of ownership and regulation of public transport should be separated and that the Aviation Authority's ambit should be broadened to include taxis and buses.