Sir, - I write to correct a misleading impression which may have been given to your readers by an article entitled "Pressure mounts to end groceries order" (July 28th). The Competition Authority issued a statement to the media, repeated in The Irish Times, purporting to contain certain facts on the Groceries Order. But RGDATA, among others, contends that that statement and subsequent article are grossly misleading.
The Competition Authority statement contains three main assertions:
1. The Groceries Order does not protect independent grocers and the number of stores selling goods covered by the order fell by 16 per cent between 1988 and 1998, while the number of specialist stores selling goods not covered fell by 8 per cent.
2. Inflation is higher for items covered by the Groceries Order, with prices rising by 7.8 per cent from 1994 to 1999 against a rise of 4.5 per cent for items not covered and a rise of 2.8 per cent for meals eaten out.
3. Food inflation in Ireland is the second highest in the EU, with Irish food prices rising by a cumulative 10.3 per cent between 1995 and 1999 against an EU average of 4.6 per cent for the same period.
If those so-called facts were true, they would form a powerful case against the Groceries Order. But they are not.
Firstly, the key fact is not that older, smaller outlets have closed. It is that between 1988 and 1998 the market share of independent grocers rose from 36 per cent to 46 per cent as independents invested in bigger, more modern stores. Yes, some smaller outlets closed, but many of these were very small ones that have since been converted to other uses. The Competition Authority also omits to mention the rise of garage forecourt shops, of which there are now approximately 1,500. These scarcely existed in 1988.
The authority's second assertion, that "inflation is higher for items covered by the Groceries Order", is just not true. Unfortunately the Competition Authority doesn't state the source of its information. However, we at RGDATA have conducted a detailed analysis of the CSO's food sub-indices between 1994 and 1999. When these are weighted to reflect the composition of the notional food basket used by the CSO to calculate the Consumer Price Index it can be seen that Groceries Order products increased in price by 13.8 per cent (not 7.8 per cent) while non-Groceries Order products increased by 19.3 per cent (and not the 4.5 per cent claimed by the Competition Authority) between 1994 and 1999. In addition, our calculations demonstrate that the cost of eating out increased by 20.4 per cent over the same period, rather than the 2.8 per cent claimed by the Competition Authority.
On closer inspection, the authority's third assertion - that "food price inflation in Ireland is the second highest in the EU" - also fails to stand up. According to the EU's statistical service Eurostat, Irish food prices rose by 26.6 per cent between 1985 and 1995, against an EU average of 46.1 per cent. While Irish food prices have risen faster than the EU average since 1995, this is largely due to the near-30 per cent depreciation in the value of the Irish pound against sterling over the past five years rather than to the Groceries Order, which has been in force since 1987.
Not alone has Irish food price inflation been quite modest by EU standards since the introduction of the Groceries Order, but Irish food prices are, contrary to popular opinion, lower than those prevailing in the UK. RGDATA conducts regular price comparisons between the Republic of Ireland, Northern Ireland and Britain. These have consistently shown that grocery prices in the Republic are more than 5 per cent lower than those in either Northern Ireland or Britain.
The Groceries Order has helped to maximise competition and keep prices down in Ireland. Scrapping the Groceries Order, far from reducing prices, would reduce the choice available to Irish consumers and force them to pay more. - Yours, etc.,
Ailish Forde, Director General, RGDATA, Blackrock, Co Dublin.