The Joint Oireachtas Committee on Enterprise and Small Business is to strengthen its support for retaining the Groceries Order, which aims to ban below-cost selling. However, it will ask that the Director of Consumer Affairs find evidence in favour of its modification.
The committee, which comprises Fianna Fáil, Fine Gael, Labour and some independent deputies is preparing a submission to the Minister for Enterprise, Trade and Employment, as part of a general review of the order.
A cover note to the committee's latest draft report on the issue states that its language has been recently strengthened in response to a request by its members for more "robust and comprehensive" language.
The submission, which has been seen by The Irish Times, was discussed at length yesterday in private session and is due to be finalised this morning
The order has been a source of controversy since its inception. Last Monday, the Chambers of Commerce in Ireland called for its reform, adding its voice to other similar calls.
The order was introduced in 1956 to abolish resale price maintenance, whereby suppliers force retailers to sell goods to consumers at artificially high prices. It was amended in 1987. The amendment was aimed at preventing below-cost selling for a range of processed foods and household goods, excluding fresh food produce.
However, the order defines below-cost selling by referring to the price invoiced by the supplier rather than the actual cost of production. Opponents of the order claim that, when charging retailers for bulk purchases, suppliers often omit from quoted invoices the value of bulk discounts, even if production costs are lower for such purchases - thus preventing retailers from passing on valid discounts to consumers. Supporters of the order say that it merely protects the consumer from predatory pricing.
Calls from the Competition Authority and National Consumer Agency to abolish the order have been followed by calls for its reform. The cover letter to the draft submission notes that the Cork Chamber of Commerce has recommended that the ban should apply to the real cost of goods, rather than the net invoice price. This would permit consumers to benefit from discounts but retain a ban on selling goods below their cost of production.
However, an earlier report of the Consumer Strategy Group (CSG), established by the previous minister for trade, Mary Harney, concluded that genuine below-cost selling would not have serious adverse effects on the Irish retail industry.
Data from European statistics agency Eurostat are cited in the CSG report as evidence that retail prices are high in the State relative to the EU. The joint committee's draft submission argues that Eurostat data overstate the Irish price level by relying excessively on Dublin prices.
The Joint Oireachtas Committee's draft submission calls on the Director of Consumer Affairs to use her powers under the order to seek information from suppliers with a view to determining the effect of such a change. It concludes that, when this information is made available, the effect of any possible change in the order could then be assessed. In the interim, it calls for the order to be retained in its present form.
Under the current review, submissions may be made to the Minister until the end of July and will be evaluated in August and September. The Government is to make a final decision on the order later in the autumn.
According to sources on the joint committee, none of its members have supported the order's outright abolition.
