AN OPPORTUNITY to address overcapacity and inefficiencies in the Irish beef processing industry will be lost if the European Court of Justice (ECJ) upholds a preliminary ruling by its advocate general to reject a deal that would reduce the number of abattoirs in Ireland, an industry group said yesterday.

"We have to see what the final outcome of it is and what the final outcome of the Supreme Court is, but you could not but be disappointed with what is coming from the advocate general's preliminary finding," said Cormac Healy, head of Meat Industry Ireland an affiliate of employers' lobby Ibec.

In most cases, the advocate general's opinion is upheld by the court. The deal, drawn up by beef producers, compensated firms leaving the industry in return for their agreeing not to re-enter the business for two years, not to use decommissioned plants for beef processing for five years and to sell their equipment only to those staying in the business.

Compensation would come from loans that would be repaid through levies imposed on firms remaining in the industry.

The proposal was challenged by the Competition Authority and referred to the European Court of Justice by the Supreme Court.

"Overcapacity is still an issue in the sector and there is still a need to improve and build scale in the sector and improve efficiency," said Mr Healy. "Any sector operating with an inbuilt inefficiency, operating on a three or four-day week cannot be best practice and certainly isn't what you would be looking for when trying to survive in a very competitive climate."

However, other sources have played down the preliminary ruling. "It is not a big deal," said one source. "I don't see any real implications in this for the meat processing sector. Other events have overtaken it. Rationalisation has continued to take place on an ongoing basis in any event."

The agreement was first drawn up in 2002 by the country's biggest beef producers, known collectively as the Beef Industry Development Society. Since then there have been a number of plant closures. This year, Dawn Meats said it was amalgamating its Ballaghaderreen and Ballyhaunis sites in the west into one operation based at Ballyhaunis, while Slaney Group said it was closing its Freshford meat plant in Kilkenny.

The Government announced last year €50 million in grant aid was to be made available under the National Development Plan to improve efficiency and competitiveness of beef processing.