CCI opposes Groceries Order

The Chambers of Commerce of Ireland (CCI) has come out against the Groceries Order following an internal consultation process. The order is strongly supported by some CCI members but the organisation overall has told the Department of Enterprise, Trade and Employment that it believes it is flawed.

The order is aimed at preventing below-cost selling, although the CCI believes it does not achieve its objective. The order is currently under review by the department.

The organisation wants the order scrapped and the prohibition on below-cost selling achieved through the introduction of some new measure.

It believes the current regulation "is a ban on below invoice-cost selling - an anti-competitive practice that prohibits businesses from passing on to their customers discounts they receive from suppliers in terms of an end-of-year invoice," said John Dunne, CCI chief executive.

He said the order should be abolished as it "creates an anti-competitive environment and acts to the detriment of the economy and national welfare".

"The... order is flawed on many levels, creating an anti-competitive environment, unnecessarily higher retail prices and the potential for Enronesque accounting practices in the retail sector."

He said the CCI agrees with retailers that below-cost selling is wrong but does not believe that the order addresses the issue.

"We realise the abolition of the order will create particular challenges for small, independent retailers but such problems will have to be overcome through new business models and reorganisation and they do not, of themselves, constitute sufficient justification for the retention of the current order," he added.

He said the current regime allowed for confusing invoice and actual prices which could facilitate the type of profit overstatement that led to the collapse of Royal Ahold in 2003, a firm that, at the time, was the third-largest food retailer in the world.

"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'."