The Chambers of Commerce of Ireland (CCI) has called for the abolition of the Groceries Order, claiming the ban on below-cost selling is detrimental to the economy, reports the Irish Examiner.
Go deeper with GlobalData
In its submission to the Department of Enterprise Trade and Employment, which is carrying out a review of the Groceries Order, the CCI said it must go. It said the order “is flawed on many levels, creating an anti-competitive environment, unnecessarily higher prices and the potential for Enron-esque accounting practices in the retail sector”.
The abolition of the order was recommended by the Consumer Strategy Group, though the government is canvassing the views of interested parties before making any decision to scrap it.
CCI chief executive John Dunne said: “This is a highly complex issue, the key points of which have been obscured in the debate to date. CCI agrees with retailers that below-cost selling is wrong.”
“However, our analysis suggests that the Groceries Order does not address this issue at all,” he said. “Rather it is a ban on below invoice-cost selling an anti-competitive practice that prohibits businesses from passing on to the customer discounts that they receive from suppliers in the form of an end-of-year invoice.”
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataHe added that while scrapping the order will create challenges for small independent retailers, such problems will have to be overcome through new business models and reorganisation.
“There is another significant argument for the abolition of the current order which was not been adequately addressed in the debate to date,” Dunne said. “The order allows for a system of confusing invoice and actual prices which could facilitate the type of profit over-stating that led to the collapse of Royal Ahold in 2003 a company which was then the third largest food retailer in the world,” he said.
“The order should be replaced with one that requires invoices to reflect the actual cost of goods supplied and protects smaller retailers from predatory pricing by banning below real cost selling outright, or else by disallowing restrictions such as customer quotas on the purchase quantities of ‘special offers’.”
