Court threat to pub price freeze

THE COMPETITION Authority has threatened the two bodies representing publicans with court action unless they abandon a coordinated price freeze across the State’s 5,500 pubs.

The authority says the one-year price freeze announced by the Licensed Vintners Association (LVA) and Vintners Federation of Ireland (VFI) last December breaches Irish and European competition law and could discourage publicans from reducing prices at a time when prices were falling generally.

Its stance has drawn an angry response from the two organisations, which accused the authority of being “more interested in philosophical dogma than the interests of consumers”.

In a joint statement, they said the initiative had worked successfully since last December to discourage publicans from raising prices to counter falling sales and was widely welcomed by consumers.

The two organisations warned that the result of yesterday’s move by the Competition Authority could be price increases by publicans in certain parts of the country to combat lower sales.

“How this is in the interests of consumers is beyond us,” said Donall O’Keeffe, chief executive of the LVA. “We’ve been explicit all along that we were not telling publicans what price to charge customers.

“We were simply encouraging members not to increase their prices beyond what they were charging on December 1st last for a period of a year.”

At the time the vintners announced the price freeze, they said they had received legal advice to say they were free to do so.

Three years ago, the two organisations settled legal proceedings taken by the authority over alleged price-fixing in the 1990s.

At the time they undertook not to recommend to members the price or margins to be earned on the sale of drinks.

Since December, the authority has met and written to both organisation to express its serious concerns about the announcement. The LVA, which represents Dublin publicans, and the VFI, which represents country pubs, have been told to “cease and desist” or face court action.

More than 1,500 pubs, mostly in rural areas, have closed since 2001 as a result of a downturn in business blamed on the smoking ban and increased Garda monitoring of drink-driving. Bar sales fell 10 per cent by value last year.

The two groups said they will now consult again with their advisers and members to decide the way forward.