Grocery code will not stall price adjustments

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FDII and Fine Gael food and agriculture spokeperson Michael Creed "fundamentally disagree" with Competition Authority opinion

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15 November 2009 | 0

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Food industry representatives have said they “fundamentally disagree” with critiques by the Competition Authority and Economic and Social Research Institute (ESRI), that a grocery code of conduct and ombudsman would lead to higher prices for consumers.
Fine Gael’s Michael Creed told ShelfLife he “fundamentally disagrees” with the Competition Authority’s verdict that such a code limits the “natural tension between retailers and suppliers,” and subsequently may “slow or indeed stall” price adjustments.

Instead, the TD who had previously put forward ‘The Food (Fair Trade and Information) Bill 2009’ to outlaw ‘hello money’ believes Government should “instance the UK experience.” There, the Competition Commission at “the behest of The Office of Fair Trade” has drafted a new tougher code of practice, including an ombudsman.

While the ESRI has argued a code could ultimately result in leading retailers sourcing more product from abroad – an argument likewise advanced by Musgrave – Creed has disputed this claim.

“In reality that’s happening now,” said Creed. “Who can be afraid of a fair trade framework, that applies equally to everybody?” he asked.   

Shane Dempsey, head of consumer foods at Food and Drink Industry Ireland (FDII) also said a code that outlawed “arbitrary financial demands” on suppliers, would ultimately benefit the consumer, “as retailers can continue to provide access to quality Irish food at affordable prices.

“Without a code, there is a risk that suppliers will be forced to retrench, stall investment and see their ability to service retailers in more remote areas critically impaired.”

He also believed a code and ombudsman “should not affect consumer prices greatly,” because the costs involved would be minimal for supermarkets. The estimated cost of £5m in the UK, which applies only to retailers with over £1 billion turnover, breaks “down to about a penny per shop,” he said.

 

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