The Competition Authority has published its submission to the minister for enterprise, trade and employment recommending the removal of the Groceries Order, which, it says, costs the average Irish household €481 (US$596m) a year.
Analysis of food prices undertaken for the submission estimates that this regulation costs Irish consumers up to €577 million (between June 2004 and June 2005).
“The Groceries Order pushes up food prices in Ireland, and is against the interest of consumers and the economy,” said John Fingleton, chair of the Competition Authority. “The successful prosecution of two supermarkets in January 2004 for providing discounts on baby food is a perfect example of why the Groceries Order needs to be abolished. If this logic was applied in other sectors, for example clothes, it would make post-Christmas sales a criminal activity.”
“We are urging the Minister to take the opportunity to remove one of the most anti-competitive and protectionist devices from the Irish statute book,” he said
Ireland has become one of the most expensive countries in the Euro-zone for food shopping. High prices for food in Ireland are in stark contrast to other retail sectors where prices have fallen.
Between 2000 and 2004 the rise of food prices compared to the reduction in clothing and household goods prices was:
Food and non-alcoholic drink + 9.6%
Clothing and footwear – 15.9%
Household durables – 3.9%
(furnishings and white goods)
Therefore rising business costs common across all retail sectors – such as rents, insurance, waste charges, electricity, and wages – do not explain why Ireland is so expensive for food. Neither are farm gate prices to blame, as they have remained stable over the same period.
In recent years the price of food has stabilised (although at a higher level than other EU countries). This stabilisation coincides with increased competition following the arrival of Aldi and LIDL in Ireland.
Closer examination reveals that inflation on items protected by the Groceries Order is significantly higher than inflation on food items not covered by the Order. This shows that recent competition on price has been limited to items not covered by the Groceries Order.