Day of reckoning looms for Martin

Micheál Martin might not like it, but he is facing his biggest test since the ban on smoking in pubs in deciding whether to retain…

Micheál Martin might not like it, but he is facing his biggest test since the ban on smoking in pubs in deciding whether to retain or repeal the Groceries Order. With all sides in the debate lining up in droves to make their point, the Minister will confront a barrage of argument when he returns from his holidays.

The order, in place for almost 20 years, prohibits below cost selling of packaged goods. At issue is whether retailers should be free to charge whatever they want.

If that seems a boon to hardpressed consumers, the order's supporters claim its removal would ruin the fabric of smalltown life by forcing the closure of corner shops. Amid persistent consumer complaints about a "rip-off" culture, the debate is emotive.

It also underlines the limited number of economic levers available to the Government to contain inflation. After all, the money people pay out daily for mortgages, petrol and imported goods is to a large extent determined abroad.

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There is little that Mr Martin and his colleagues can do given the vagaries of the global oil and currency markets. Neither can they determine the interest rate set by the European Central Bank.

If this suggests the Government should do all it can to curb prices in the countdown to a 2007 election, charting a way around arguments on the Groceries Order to produce a solution that satisfies all sides might well prove impossible.

But Mr Martin has had no option but to act on the question ever since the Consumer Strategy Group called for the order's repeal in a report that highlighted the persistently high prices that Irish consumers must pay for basic goods and services.

First out of the traps was the Competition Authority, which said yesterday the order kept food prices artificially high and was against the consumer's interest.

"The Groceries Order has limited competition by criminalising retailers who offer low prices on a range of items, including baby food," it said. Noting that Ireland was one of the most expensive places to buy food in the eurozone, it made a point of noting that food costs in Ireland rose when prices in other retail sectors fell.

Citing Central Statistics Office data, it said the price of food and non-alcoholic beverages grew by 9.6 per cent between 2000 and 2004, while the price of clothing and footwear fell 15.9 per cent and the price of durables and household goods fell by 3.9 per cent. Needless to say, the order does not cover clothing and durables.

The authority also minimised the role of German discount retailers Aldi and Lidl in lowering food prices. "Since the arrival of Aldi and Lidl, the price of food has stabilised but only because of increased competition on items not covered by the Groceries Order."

The interim National Consumer Agency, set up recently by the Government to bring consumer issues to the fore, backs the authority's stance. It also calls for the order's repeal. While its submission will not be published until next week, its advice cannot be ignored.

But powerful commercial interests have mounted a noisy campaign to support the order, casting the biggest of retailers in the role of villain who would charge as little for packaged goods for as long as it takes to drive their smaller rivals out of business. This view has found more than a little sympathy in groups such Ibec and small trader lobby RGDATA, both of which have made submissions to a review now under way in Mr Martin's department.

The Competition Authority rubbished such arguments yesterday, saying they do not bear analysis. "Because they are in different markets, small shops will only be put out of business if, either other convenience outlets in the same area consistently offer their consumers a better deal, or consumer preferences shift over time from smaller convenience outlets to larger outlets."

At its most basic level, the argument pits small business against the interests of the bigger commercial beats. Yet the issues are not as simple as that. Mr Martin would do well to enjoy his break. He put off the evil day by initiating a consultation period. With submissions in since the end of last month, that day is looming.

Arthur Beesley

Arthur Beesley

Arthur Beesley is Current Affairs Editor of The Irish Times