Planning laws are contributing to high grocery costs in the Republic because retailers use them to prevent competitors from entering the market, an Oireachtas committee heard yesterday.
Competition Authority chairman Mr John Fingleton told the Joint Committee on Enterprise and Small Business that planning laws are slowing down - and raising the cost of opening - new supermarkets.
"With some county development plans, existing retailers may be able to abuse the planning process to prevent a rival from making a more attractive offer to their customers," he said in a submission. "As a result, new supermarkets have been either prevented or delayed."
Responding to questions from the committee, which is investigating high grocery charges, he said that the Donegal town development plan had prevented one supermarket (Tesco) from opening a branch there on the grounds that it would affect existing traders.
Mr Fingleton said decisions like that resulted from appeals taken by the independent retailers' group, RGDATA, on behalf of existing grocers. "They are using the planning process to prevent people from coming into the market and selling goods to 'their' customers," he said.
Reacting to this yesterday, RGDATA boss Ms Tara Buckley said that the organisation did not oppose plans on competition grounds, but only if it believed that they breached retail planning guidelines, retail strategies and local development plans.
Mr Patrick Kaudewitz, managing director of German-owned Lidl Ireland, said there is a need for greater transparency and consistency when local authorities implement retail planning guidelines. Lidl has opened 48 stores in the State since it entered the market in July 2000.
Mr Kaudewitz singled out land prices as a key barrier to anyone entering the grocery business. "It is very difficult for somebody new to start in the retail business in this country because of high land-prices," he said. "So if you do not zone sufficient land, that will continue to have an impact."
Mr Fingleton said the Groceries Order, which bans selling groceries below cost, prevented price competition. He pointed out that the State prosecuted two supermarkets for this last year.
"If you criminalise cutting the price of baby foods and nappies, you are sending out an anti-consumer message," he said.
Mr Séamus Scally, chief executive of convenience store franchiser Musgrave, argued that the grocery sector was highly competitive. He told the committee that food prices had fallen during the first nine months of the year, while energy charges had jumped by 12 per cent and waste disposal costs rose by 4 per cent.
He said distribution labour costs were up to 30 per cent higher in the Republic than the UK. He also warned that the cost of waste disposal needed to be brought under control, and called on the Government to cut commercial vehicle road taxes.
"We believe that the VAT rate should be reduced to 17.5 per cent on food," Mr Scally said. "This would immediately bring down inflation by nearly 1.5 per cent."
