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18 August 2005 Edition

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Who wins from below cost selling?

There are this summer a growing number of groups lining up to tell us that 26-County households are being ripped off. This week's entrants include the Competition Authority and the Consumers Association.

Last week's submission from the Competition Authority to Micheál Martin, Minister for Enterprise Trade and Employment, argues that households are paying nearly €500 a year more on groceries than needed.

Further costs are being loaded on households buying electrical equipment this week after the introduction of a new directive compelling electrical equipment retailers to be responsible for recycling the products they sell and to be prepared to take back old electrical equipment from households. The response of many retailers has been to pass off the costs of implementing the new directive directly onto the customer.

These increased charges come on top of higher electricity, gas and VHI charges already being implemented this year. Then there is the increasing cost of petrol, not to mention house prices or households who already bought homes having to deal with last year's increase in mortgage rates. Clearly the customer is not king in Ireland today.

The Competition Authority's survey found that the 1987 ban on below cost selling is costing households nearly €577 million annually. The 1987 ban on below cost selling was introduced to stop overly aggressive competition between Irish retailers who were slashing prices on goods like bread and milk in an effort to drive their competition out of business.

Irish bakers and milk producers were being put under considerable pressure and the government of the day decided to introduce the order to protect Irish jobs. Now nearly 20 years later it is unclear whether jobs were actually protected as Ireland has the most open market economy in the industrialised world and there have been huge competitive pressures on Irish food producers.


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