I propose to take Questions Nos. 81 and 117 together.
The publication last week of the study by the Competition Authority of the retail-related import and distribution sector is part of my own and the Government's ongoing commitment to bring greater transparency to structure and pricing in the retail sector.
I asked the Competition Authority to carry out the study following the findings of a Forfás report, which suggested that the strong Euro, which had failed to translate into lower import costs on goods from the United Kingdom, could be indicative of a lack of competition in the import, distribution and retail sectors. This study will, I believe, greatly assist in informing the wider debate on why Irish consumers have not seen the full benefits of the strengthening Euro against Sterling over the past year in the prices they were paying for certain goods.
Overall, this study confirms that while there are no major systemic problems in the overall retail market, the market dynamics can differ across the various retail sectors with some being more flexible than others.
The study also shows that price adjustment to currency movements varies across sectors while also providing evidence which suggests that the ‘high low' pricing policy that operates in this country, while less transparent than the everyday low prices policy that operates in the UK and Northern Ireland, is in fact a function of what the Irish consumer had grown to know.
However, it is now clear that demand for the ‘high low' policy is changing and that Irish consumers now want everyday lower prices. This is evidenced by the success of new entrants to the market, by consumers travelling to shop in other markets and by more recent changes in certain supply, distribution and pricing structures.
The report also finds that increasingly price-conscious consumers are shopping around for the best prices, which in turn spurs more competition between retailers and their suppliers. This is causing prices to fall. For example, between January and May 2009 grocery prices fell by over 2% with additional grocery price reductions signalled this month.
Reductions in the cost of goods cannot be viewed in isolation however. Continued focus on reducing the cost of doing business in this country is necessary in order to help suppliers increase and maintain their competitiveness. The development of any policy affecting the grocery goods sector must reflect the importance of the indigenous food industry and of the retail sector, both of which must be vibrant and competitive while also best serving the consumer and their welfare.
As regards future steps, I can confirm that work is ongoing in my Department on the drafting of a Code of Practice for the grocery sector that would aim to bring further transparency and ensure a balanced relationship between all elements of that retail chain, including retailers, suppliers, distributors and consumers.
The study has been brought to the attention of the European Commission and also to the Oireachtas Joint Committee on Enterprise, Trade and Employment in order to assist with their respective retail sector examinations.
I have also arranged for copies of the report to be distributed to all Deputies in the House.