CONSUMERS ARE paying over the odds for their groceries because multinational retailers are making up to three times the profits in the Irish market as they do elsewhere, according to a new report.
Retailers are behaving unethically by using their market power to impose unfair conditions on suppliers, the report by the Oireachtas Committee on Enterprise, Trade and Employment claims.
Demands by retailers for “hello money” and other secret payments from suppliers are “common practice”, the report states. Suppliers are frequently required to make payments and provide services “considered to be outside acceptable business practice”.
The report, backed by committee members from all the main parties, calls for the introduction of a statutory code of practice to ensure fairness in the grocery sector as well as a system for measure compliance with the code.
Earlier this week, Tánaiste Mary Coughlan, in her last act before being moved from the Department of Enterprise, Trade and Employment, appointed former attorney general David Byrne as a facilitator in the development of the code of practice.
However, Ms Coughlans intention was to introduce a voluntary code to begin with. Legislation currently being prepared to merge the National Consumer Agency and the Competition Authority would then be altered to include a specific provision allowing for the introduction of a statutory code. This might not be introduced if the sector managed to agree on the principles of a voluntary code.
Mr Byrne is expected to report back in three months, after which it will be up to the new Minister, Batt O’Keeffe, to decide how to proceed.
The committee’s report also calls on the industry to agree a method by which the profit figures of retailers and suppliers, as well as other relevant data, could be put into the public domain. It was drawn up in response to claims by many Irish producers and suppliers that they are being subjected to unfair demands by big retailers fighting a price war. Fifty suppliers were approached to participate but only seven agreed, even though anonymity was guaranteed. No retailer was contacted during the compilation of the report.
“The report clearly highlights the disproportionate market power that large retailers retain in the Irish retail market and the disadvantages that this places suppliers and other retailers in, when seeking to conduct their business,” said committee chairman Willie Penrose.
Retailers, some of whom have already appeared before the committee, are expected to be invited to return to answer further questions and give their response to the report.
Suppliers who participated in the research claimed prices are still much higher in Ireland than elsewhere. They put this down to our lower population density and the retailers’ “insatiable” appetite for margin. Ireland is regarded as a “massive profit centre” for retailers who see consumers here as an ideal opportunity to make “superlative” profits, it is claimed.
One supplier said the retailers’ margin on his product was 32-35 per cent in the UK, but 45-50 per cent in the Republic.