John Perry
Ceist:4 Mr. Perry asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on the recommendation of the Competition Authority to rescind the Restrictive Practices (Groceries) Order, 1987. [18371/97]
Other Questions. - Restrictive Practices (Groceries) Order.
The Restrictive Practices (Groceries) Order, 1987, which remains in force, is currently being reviewed by the competition and mergers review group. The Competition Authority has made known its views on this matter in its submission to the review group. I do not intend taking action in this area until I have received the final report of the review group and I have considered its recommendations on the matter.
Is the Minister aware of the devastating effect of the increase in large multiples on the retail sector in the UK, with the closure of 8,000 small retail shops in the past three years? The Minister should ensure this order remains in place for a considerable time until the impact of Tesco is realised. The retail industry is a huge industry involving suppliers, manufacturers and retailers. I am concerned Tesco will take over the retail market because that would have a devastating effect on all those involved.
Since the introduction of the Restrictive Practices (Groceries) Order there has been the lowest rate of increase in food prices since 1947, which proves its effectiveness. It has ensured rationale in the retail sector. I welcome competition, which is important, but the opening up of Tesco in Ireland poses a serious threat to the survival of many retailers. Its commitment to the manufacturing industry should be met. It is important that company does not use Ireland as a distribution centre, as is the case in the North. Even though a commitment was given that Tesco would engage Irish companies, it is bringing in stock from the UK.
A number of Irish companies have been requested to bring their stock to distribution centres from where it is distributed by Tesco lorries. That will have a serious effect on the industry. Will the Minister ensure the order is not rescinded? Is she aware suppliers have been notified to reduce stock levels? There is cherry-picking in terms of the range of stock carried and that will have a disastrous effect on small firms. I appeal to the Minister to ensure Tesco meets its obligations, otherwise there will be a serious threat to the survival of retailers.
There is much merit in what the Deputy has said. The order has led to stability in the marketplace. It prevents predatory pricing and the payment of "hello" money. It is interesting, however, that in the years from February 1988 to April 1997 products covered by the order increased by 23.42 per cent whereas in areas not covered by the order products increased by 22.4 per cent. My predecessor extended the order in 1995 and I await the report of the review group before making a decision on the matter. I have much sympathy with many of the points made by the Deputy.
Is the Minister aware the survival of retailers depends on the existence of the order? Regardless of the statistics she has quoted, there is a grave risk that small retailers will close if the order is rescinded.
We must look after the interests of retailers in rural Ireland, but we must also ensure there is competition and that consumers do not pay too high a price for their goods. I will take those factors into account when I receive the report of the review group later this year.
As the review group got an extension of two years, will the Minister give a commitment that she will renew the order if she has not received its report before the second period expires? Is she aware that an Irish company was asked by Tesco to remove all but 24 of the 100 products on its shelves? This is contrary to what I believe was the understanding when it was agreed Tesco could operate here. I can give the Minister details of this later if she wishes.
I assure the Deputy I will not make a decision in advance of the review group reporting. I have had discussions with Tesco who reiterated to me, orally and in writing, the commitments it gave to my predecessor and I am determined to ensure they are honoured. We had discussions this week with some of the English multiples on these issues. I will investigate the matter to which the Deputy referred if she gives me the details.