Deregulation does not necessarily lead to lower prices, writes Paul Cullen, Consumer Affairs Correspondent
A CALLER to a radio chat show recently told how she had travelled North to Ikea to buy a lorry-load of furniture, then headed over to Sainsbury's in Newry to buy seven trolleys of food before returning to Dublin.
It is the sort of tale that must have retailers in the Republic waking in a cold sweat, as consumers vote with their feet against high prices.
The latest price survey by the National Consumer Agency to be published today will show once again how high food prices are in the Republic. However, diagnosis is proving easier than cure.
Retailers blame higher prices on the higher costs of business in the Republic. Yet corporation tax is lower and it is interesting that most operators do not publish local profit figures.
The Competition Authority and others told us the abolition of the groceries order would cut prices. In fact, apart from a short period after it was removed in 2006, the opposite has happened. Food prices have rocketed, mostly because of external factors.
Now the authority suggests the cap on the size of existing grocery stores should be removed to promote greater competition.
Bigger stores mean greater economies of scale and, theoretically, savings to pass on to consumers. Removing the cap would also make the market more attractive to the likes of Asda and Sainsbury and their entry could foster greater competition and lower prices.
Authority chairman Bill Prasifka likened the situation to the deregulation of taxis, which has led to a six-fold increase in the number of cabs. The trouble with this comparison is that large retail stores are not like taxis; they are big and ugly and like to locate away from town centres where land is cheaper. The cost to the health of existing urban centres isn't spelled out in this report.
Since 2001, 220 supermarkets have opened and floorspace has grown by almost 80 per cent - hardly a retail famine.
The authority also wants the removal of a rule limiting the size of discount stores to less than half the maximum size of other supermarkets. Yet discounters such as Lidl and Aldi stock on average no more than 1,000 lines, compared to 20,000 in large supermarkets.
The proposals are unlikely to find favour with Minister for the Environment John Gormley, who believes existing retail planning guidelines have maintained the vitality of towns and villages.
The Irish retail market is one of the most concentrated in Europe. Price surveys reveal a remarkable similarity in prices across the main retailers. Why so? The British authorities have vigorously investigated the retail trade, even launching dawn raids on offices where price-fixing was suspected.
Here in Ireland, we get reports.