Restrictions on food prices and shop size are limiting competition in the food sector which would lead to lower prices, the chairman of the Competition Authority said today.
Dr John Fingleton told the the Oireachtas Committee on Enterprise and Small Business today that the Groceries Order appears to be a ban on below cost selling, the Order in practice allows wholesalers who give off-invoice discounts to dictate both wholesale and retail prices, a practice known as resale price maintenance.
Dr Fingleton said that price cuts on 'loss leaders' are not necessarily funded by price rises on other items but instead by retailers seeking ever better deals from their supplier.
"This explains why the strongest opposition to the abolition of the Groceries Order comes from food manufacturers," Dr Fingleton said.
Earlier this year, two supermarkets were fined for reducing the price of baby food and nappies. Dr Fingleton warned that "criminalising supermarkets for cutting prices sends an extremely anti-consumer message to supermarkets who would like to compete on price, and directly harms price sensitive parents."
Dr Fingleton said the cap on the size of new stores acts as a barrier to entry at a time of growing demand leading to limited consumer choice at higher prices.
The lifting of the cap would not lead to a "Wal Mart" effect of large out-of-town shopping centres destroying traditional town centres, as many small town simply cannot support hypermarkets. Rather the existing laws give unnecessary protection to existing supermarkets from competition and has led to the congestion of town centres, Dr Fingleton said.