Too good to be true? You bet! - The social price of below cost selling:BY MARY LOU McDONALD

Between 1995 and 2000, roughly one fifth of local shops and services were wiped out in Britain. Over 30,000 corner shops, grocers, banks, post offices, pubs and hardware stores disappeared from urban and rural communities across the country. 42% of towns and villages have no shopping facilities. By 2005, another 28,000 may have vanished.

The threat of similar devastation for Irish small businesses is a real one in light of reports that the Government is considering amending some of the most progressive legislation in Europe designed to protect small businesses and the economy of local communities. This legislation includes a ban on below cost selling. These 'loss leaders' are products sold at less than the cost of production to lure customers into the store and create an impression that the store is cheaper than rivals. Small stores with tight profit margins find themselves unable to compete. Last January, Dunnes and Tescos were both found to have violated the order by selling below cost baby food.

Retail Planning Guidelines put limits on the size of new retail warehouse outlets and are recognised internationally as an example of best practice. They prevent the emergence of the massive superstores that dominate the British and American retail industries. These guidelines and the ban on below-cost selling have ensured that retail development in the 26 Counties takes place in a relatively sustainable manner that provides a measure of protection to small traders and local economies.

The sector that bears chief responsibility for the destruction of local trade in Britain and which would welcome the removal of the restrictions currently operating in the 26 Counties is the large multinational supermarkets. Asda and Tesco for example, have been building massive stores of 100,000 square feet and more across Britain for years. Media reports last year indicated that IKEA has suggested to the Government that they are interested in building a new retail warehouse of 300,000 square feet.

Developments of this size have massive implications for traffic congestion and use of land but perhaps their most obvious impact is on the local economy.

A 1998 report by the Department of the Environment in Britain found that food shops in market towns lost between 13 and 50% of their trade when a superstore opened up on the outskirts of the town. This has a knock on effect on employment, with small traders closing, and figures from one of the superstore's own research organisations, the National Retail Planning Forum, suggest that every time a large supermarket opened, 276 people lost their jobs.

This takes into account not only the job losses that result when small traders close down, but the knock-on effect this has on the community. Money we spend as consumers in our neighbourhood grocery store or newsagent tends not to travel very far. Local food shops and market traders tend to source their goods locally wherever possible. They tend to use local accountants, banks and service providers, putting their profits back into the local economy.

This is in stark contrast to the major retail chains, who often source tiny percentages of their produce locally and transfer all profits overseas to the benefit of their shareholders. They suck the life, and the money, out of small towns and neighbourhoods.

Among the other social consequences of the destruction of local trade are ill health and poor nutrition, as people no longer have access to shops and grocers and an increasing dependency on the car rather than the bus to travel to the local supermarket. The increased distance to travel to the supermarket, normally located on the edge of town, makes it harder for people without private transport, the elderly, the disabled and others to do the shopping. Moreover, the unemployed lose informal routes back into the work force as part-time jobs disappear.

Some would argue that below cost selling and huge supermarkets can have a positive impact by reducing the price of groceries, offering greater choice and competition. These advocates of 'free competition' ignore the damage caused by their policies. In reality, supermarkets reduce competition, driving out alternative local businesses that were competing with them, reducing choice. Free competition is not fair competition. As they stand, the retail planning guidelines have not stood in the way of the rapid growth of German discount stores entering the market, with 40 stores already and more in the pipeline.

The Government is considering changes to the regulations, both because of pressure from vested interests and also to appear to be doing something to tackle inflation and the rising cost of living. The food and groceries sector is targeted because the Coalition refuses to accept its own responsibility for inflation. Stealth charges, coupled with increases in health, energy and education costs, have been rising by over 10% on average over the last few years. These services are subject to direct or indirect government control and have been the driving force in inflationary increases. In contrast, inflation in retail food products is running far below the general rate of inflation. In other words, the government is the chief source of inflation in this state.

Retail planning is an area where the need for an all-Ireland approach to decision making is obvious and this puts Sinn Féin in a unique position. Whether a superstore is located just to the south or to the north, it will have a serious impact on small businesses and the economic life of communities on both sides of the border. A cross-border approach to planning rooted in the need to develop communities is essential in the face of large companies like Wal-Mart and Tesco wanting to expand their share of the market.

In the context of the role we can play on local authorities, Sinn Féin should be looking at restricting the development of large supermarkets, with their generally negative impact on jobs, the local economy and small businesses. Supermarkets should be obliged to source a certain percentage of what they sell locally. When they are granted planning permission the guidelines must be strictly adhered to and severe punishments put in place for violations. At a European level, the EU Commission is presently considering abolishing the ban on below cost selling, currently in place in about half EU member states, and we need a strong voice in Europe to oppose such a move.

Of course, ultimate decision making power should be vested in local communities, who must be consulted as widely as possible and this consultation should not be mere lip service, but a genuinely empowered process where the community decides what is in its own best interest.