Grocery bills 'face hike' over supplier aid move
CONSUMERS will pay more for groceries if the Government goes ahead with a new code of practice for the grocery trade.
The country's leading economic think tank has criticised government moves to give grocery suppliers more power in their dealings with supermarkets, warning this could add to shopping bills.
The Economic and Social Research Institute (ESRI) said that a code favoured by the Department of Enterprise would be a form of protectionism that would stop consumers getting cheaper groceries.
The comments were made in the ESRI's Quarterly Economic Commentary, Spring 2010, to be published next week.
The department recently commissioned former EU commissioner and attorney general David Byrne with developing proposals for a voluntary code.
He is due to report to Enterprise Minister Batt O'Keeffe by June. The department said part of the brief was to make sure the new measures did not result in increased prices for consumers.
Food suppliers, farmers and politicians from all parties have lobbied for a statutory code, arguing that supermarkets have been abusing their dominant position by demanding huge unfair payments to keep their products on the shelves.
But the ESRI said that the objectives of the code were "inherently contradictory" as it could not balance the conflicting needs of suppliers for higher prices and consumers for lower prices.
Its key aim would be to restore "balance" between retailers and suppliers which meant giving suppliers more bargaining power and higher returns. This meant suppliers would get better prices for their goods, as retailers would be more restricted in getting discounts, but there would be no mechanism to test the harm of this to consumers.
The Competition Authority has opposed the introduction of a new code, but the National Consumer Agency supports new measures to ban unfair commercial practices by retailers.