Dáil Éireann debate -
Thursday, 26 Mar 1998

Vol. 489 No. 2

Ceisteanna—Questions. Priority Questions. - Retail Sector Developments

Nora Owen

Question:

1 Mrs. Owen asked the Tánaiste and Minister for Enterprise, Trade and Employment her views with regard to the potential job creation or losses of a system of superstores opening in Ireland; the concerns, if any, she has that a policy of allowing superstores to open will have an effect on the indigenous grocery grade; the discussions, if any, she has had with other Departments in relation to the policy towards these stores ; and if she will make a statement on the matter. [7743/98]

Tánaiste and Minister for Enterprise, Trade and Employment (Miss Harney)

I am aware of a proposal to build at least one superstore or hypermarket in the Dublin area and it seems likely that other such stores will follow. In assessing developments of this kind, it is important to remember that we live in an open economy where the rules of the single market apply. I have no power to prevent these developments and we must recall that Irish companies have as much right to open businesses in other member states of the Community as companies from other member states have to open here. This is a right which many Irish firms have exploited very successfully.

These developments are subject to the provisions of the Competition Acts which govern behaviour in the market. The Acts prohibit anti-competitive agreements and abuse of a dominant position. However, developments in any sector which increase consumer choice and reduce prices are in the interests of consumers.

The development of new stores will lead to significant job creation both at the construction phase and subsequently. The extent to which these will displace existing jobs is difficult to assess. Given the growth in the sector it is reasonable to predict that the net employment effect will be positive. One area of particular concern which I am actively addressing is the effect on suppliers to the retail sector. Forbairt is in the process of establishing a supplier development programme which it will shortly pilot. This programme will determine, at an individual company level, the appropriate changes required to assist the Irish sub supply base to respond to the challenges arising from the structural change under way in the market and to take advantage of new opportunities which are arising.

Mrs. Owen

What is the Minister's interpretation of what constitutes a hypermarket or superstore? Is it a store on the scale of 50,000 square feet or 100,000 square feet? Is she aware that in other countries such as the United Kingdom and France, because hyperstores have been allowed to proliferate on the edges of towns, business has been sucked from other locations? Will she discuss with the Minister for the Environment and Local Government the possibility of introducing, as in the United Kingdom, a planning measure under which the scale of such stores would be taken into account to minimise their destructive impact?

Miss Harney

I would be prepared to discuss the matter with the Minister for the Environment and Local Government. Under existing provisions local authorities have the power to designate certain areas. The Deputy is concerned mainly about the impact on towns from a commercial and social point of view. I share her concern. The bigger the store the fewer the opportunities for smaller outlets. This is a matter of some concern in rural Ireland. Given the extended opening hours of many hyperstores, it is having a negative impact on rural communities in particular. Having regard to our membership of the European Union and the opportunities that exist for Irish companies in other jurisdictions, our capacity to act in this area is limited.

We all know what we mean when we talk about a multiple store — the typical Dunnes Stores or Quinnsworth supermarket. The advantage in the economy has been that they have kept the price of food products down. There is intense competition in the sector. This has had a favourable impact on inflation, notwithstanding some of the adverse effects to which I referred earlier.

In November Forfás produced a report on the retail sector. It estimates that the share of UK multiples in the Irish market is likely to increase from 25 per cent to 50 per cent in the short to medium term.

Mrs. Owen

Is the Minister aware that the British companies which are talking about building large stores are also talking about siting petrol outlets at these locations? This would have an effect on retailers in the immediate locality. If people visit a superstore to buy their groceries, newspapers, tights and so on, they will also buy petrol. Will the Minister examine this issue?

Will the Minister also examine the possibility of introducing an amendment to the competition Acts, 1991-96, to provide that, in assessing whether an undertaking is in a dominant position in the Irish market, regard will have to be had to its global turnover and trading activities within the European Union? While some of these stores will not be in a dominant position here, they are in a dominant position within the European Union. There are 30,000 people directly involved in the small grocery sector and a further 30,000 in the supply sector.

Miss Harney

Concern has been expressed by at least one of the oil companies about the provision of petrol outlets. This is now a feature in the United Kingdom and other European countries. I am not certain what we can do to resolve the difficulties but the matter is being examined within the Department.

The Deputy made the point that, while a particular superstore or hypermarket may not be in a dominant position in the Irish market, it may be in a dominant position in the European market. In the context of mergers, if companies are over a certain size the matter is referred on. I am not certain that we could restrict companies locating here on the basis that they are in a dominant position in the European market. Each market has to be defined. This is a difficult thing to do when it comes to competition policy. The enforcement powers of the Competition Authority granted by my predecessor are effective in ensuring nobody abuses a dominant position, which is a separate matter.

We have to ensure the interests of the consumer are protected and that the consumer gets good value for money at the lowest possible price. One of the benefits has been that the consumer has been getting good value for money. As I said on a previous occasion to Deputy Perry, because of competition between the multiples, the price of products covered by the groceries order went up more than the price of products not covered by it. This is ironic.

Mrs. Owen

I do not want to thwart competition or prevent people buying goods at the lowest possible price. Will the Minister agree that a method has been found in the United Kingdom — PPG6 — to minimise the destructive impact of hyperstores and that the United Kingdom has not been found to be in breach of EU regulations? The Minister should consider this as a matter of urgency before the onslaught.

Miss Harney

While I am not responsible for planning legislation, I will be happy to discuss the matter with the Minister for the Environment and Local Government to identify the most appropriate way to exercise control over these developments. I misunderstood the Deputy. I thought she was suggesting that changes should be made to competition law. I am not certain that we can do that. If there are environmental measures we can take to amend the planning Acts, we should examine them. I will ask the Department to prepare documentation on this issue with a view to raising it with the Minister for the Environment and Local Government.