Harney to review retail restrictions

The Tánaiste, Ms Harney, may end the ban on below-cost selling as part of a push against inflation in the domestic economy.

Addressing an IDA/American Chamber of Commerce Ireland conference, she declared that regulations which prevented real competition would have to go.

Ms Harney told reporters that she was actively reviewing the Groceries Order, 1987, which outlaws selling groceries below their wholesale cost price.

"It is very actively being looked at to decide whether or not it can play a useful role in driving down inflation," she told The Irish Times.

Ms Harney also said she believed the planning limitations on retail space needed to be examined. Net retail space in individual developments is limited to 3,500 sq m in Dublin and 3,000 sq m outside the capital.

Retail warehouses are limited to 6,000 sq m. That limitation was most recently cited by Swedish furniture retailer Ikea as a bar to entering the Irish market.

This week, Minister for Environment, Mr Cullen, told the Dáil that he was reviewing the regulations. Ms Harney yesterday said she supported this move.

"If it's the case that large suppliers are prevented from getting in here and enhancing competition, then we should examine whether there are restrictions in our market place," she said.

Ms Harney has to place any order repealing the below-cost selling ban before the Oireachtas. However, a spokesman made it clear last night that she had no immediate plans to do this.

Speaking at the conference, the chamber's president Mr Austin McCabe said the Republic had only one remaining attraction for foreign direct investment - its low corporate tax rate.

"If we lose our corporate tax regime, then the game's up," he told the gathering.

Mr McCabe, who is chief executive of Symantec in Blanchardstown, Dublin, said the infrastructure and research and development would continue to be a key concern for multinationals based in the State.

"How can we expect our parent companies to seriously consider locating headquarter sales and marketing functions here when it can effectively take two working days to visit markets on mainland Europe," he asked.

Reacting to the Tánaiste's remarks, independent retailers' body RGDATA accused the Government of mis-directing its fire in the battle against inflation.

Director general Ms Ailish Forde pointed out that food inflation was 2.2 per cent, half the national average. And she added that the planning guidelines had not prevented German discounters Aldi and Lidl from opening 40 outlets in four years.

Employers' group IBEC's food and drink federation director, Mr Ciarán Fitzgerald, also denied that the sector was contributing to inflation. "It's the areas under government control like health that have inflation of 10 per cent," he said.

However, Competition Authority chairman Mr John Fingleton argued that both regulations should go. He said that the Groceries Order did not prevent below-cost selling.