Laissez-faire attitude will cost industry jobs

Chairman of the Competition Authority Bill Prasifka says prices are dropping in response to market conditions
Chairman of the Competition Authority Bill Prasifka says prices are dropping in response to market conditions

The Competition Authority's report on the food distribution sector has been criticised as belying a 'laissez-faire' attitude to a serious situation



8 July 2009

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Complaints of a laissez-faire attitude have been levelled at the Competition Authority following the release of its recent report into the food distribution sector. Head of Consumer Foods, Food and Drink Industry Ireland, Shane Dempsey said the report does not take into account the fact that although certain retailers have been demanding significant price reductions from suppliers since the start of the year, the decreases were not passed on to consumers until this summer.

“That demonstrates that there isn’t the connection between price movement and competition that Bill Prafiska thinks there is. That demonstrates that retailers do control the prices,” Dempsey said. He added that ignoring evidence of suppliers being unfairly disadvantaged in the Irish market will lead to many companies going out of business in the food sector this year.

At a recent meeting of the Oireachtas Committee on Agrigculture, Food and Fisheries, economist Jim Power said that the State has grossly under estimated the value of the Irish agri-food sector to the economy and the threat to its future viability posed by the practices of large retailers, particularly Tesco.

“Many Irish products are being gradually pushed out by Tesco own-brand products, and the shelf space available to Irish produce is becoming smaller and more expensive,” he told the committee, adding: “If Irish brands are locked out of a major retailer in Ireland, their ability to survive let alone launch new products will be severely threatened.”

Power suggested that Government should “use its influence with Tesco” to reverse its new supply policies, and implement “fair trade legislation that protects Irish suppliers from the dominant market power of the major multiple retailers such as Tesco.”

At the same meeting, Ciarán Fitzgerald, managing director CFC Consulting, told the committee he believes the retail space must be independently monitored and the Government must “outlaw business abuses like getting others to pay for one’s discounts, the opening of one’s store, one’s shelf space, one’s special offers or anywhere one discounts.”

Committee chairman Johnny Brady said that the multiples will be recalled to the Oireachtas this month.



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