Call to scrap ban on below-cost selling

[FutureTaoiseach]

The Consumer Strategy Report has called for the Groceries Order which bans below cost selling to be abolished. What do you feel about this?

I agree with this because:

As the report states, retailers involved in bulk buying from wholesalers are granted discounts which reduces the cost per unit of the ordered product. BUT, the Groceries Order bans the retailer from passing this reduced cost onto the consumer. Discounts are not included in the Order's calculation of cost! As such the Groceries Order not only bans below cost selling, but effectively it it requires the prices to be at least a large amount above cost. Grrr...

Scrap it or amend it so that discounts from wholesalers can be passed onto the consumer. Something must be done to end rip-off Ireland.

[GusherING]

Your only looking at the short term gain though. Once abolished, below cost prices will exist,yes. However, the large chains who can buy such large quantitites will sell way below cost price, undercutting smaller retailers who can't get such large discounts from wholesalers. Small business is eliminated quickly and then you only have large chains left. With only themselves left, a cartel-like market will emerge, only a few players controlling the whole market and they'll all set prices they like, making nice profit margins and ripping you, the customer off. Your only going to increase the 'Rip-off Ireland' you talk about, so thats why I'm glad the gov. is taking a sensible approach to reviewing this issue, something smart, for once!

[FutureTaoiseach]

Your only looking at the short term gain though. Once abolished, below cost prices will exist,yes. However, the large chains who can buy such large quantitites will sell way below cost price, undercutting smaller retailers who can't get such large discounts from wholesalers. Small business is eliminated quickly and then you only have large chains left. With only themselves left, a cartel-like market will emerge, only a few players controlling the whole market and they'll all set prices they like, making nice profit margins and ripping you, the customer off. Your only going to increase the 'Rip-off Ireland' you talk about, so thats why I'm glad the gov. is taking a sensible approach to reviewing this issue, something smart, for once!

Well groceries inflation is actually lower in countries without a ban on below-cost selling so that appears to contradict what you are saying! The CSG found this to be the case.

We are being completely ripped off and it must end. We are seeing our earnings eroded by grocery inflation. The value of shopping around is being stifled by this outdated law, itself a relic of the command-economy policies that kept us poor since independence until recently. Other parts of the command-economy were dismantled with more competition being let in and lower taxes and free trade within the EU. It is arguable that unless the Groceries Order is dismantled or amended, that Irish wholesalers will lose out to foreign ones who are prepared to charge lower headline prices to retailers.

[david]

Both of yous, well, sadly, this will come about eventually because of pressure from big business to gain more control of the market and because most people just want cheap, cheap, cheap. This is how BSE came about.

Unfortunately, they don't even want to think about the future you envisage, GusherING, just as they didn't want to think about health implications until it's too late.

Then, of course, there is the ludicrous and deleterious but perfectly unsurprising results of cartel-ism as detailed in
http://www.monbiot.com/archives/2005/05 ... rom-tesco/

[GusherING]

Well groceries inflation is actually lower in countries without a ban on below-cost selling so that appears to contradict what you are saying! The CSG found this to be the case.

Is that specifically down to not having a groceries order, or is it possible that Irish inflation itself, in general is just responsible for our high prices. I think we see our money eroded by inflation, not just specifically down to the price of groceries going up. That would be a rather simple view of infaltion, surely?

[FutureTaoiseach]

Both of yous, well, sadly, this will come about eventually because of pressure from big business to gain more control of the market and because most people just want cheap, cheap, cheap. This is how BSE came about.

Unfortunately, they don't even want to think about the future you envisage, GusherING, just as they didn't want to think about health implications until it's too late.

Then, of course, there is the ludicrous and deleterious but perfectly unsurprising results of cartel-ism as detailed in
http://www.monbiot.com/archives/2005/05 ... rom-tesco/

The status-quo effectively amounts to legalised cartelling.

[david]

Both of yous, well, sadly, this will come about eventually because of pressure from big business to gain more control of the market and because most people just want cheap, cheap, cheap. This is how BSE came about.

Unfortunately, they don't even want to think about the future you envisage, GusherING, just as they didn't want to think about health implications until it's too late.

Then, of course, there is the ludicrous and deleterious but perfectly unsurprising results of cartel-ism as detailed in
http://www.monbiot.com/archives/2005/05 ... rom-tesco/

The status-quo effectively amounts to legalised cartelling.

Or protection of small traders.

[GusherING]

Both of yous, well, sadly, this will come about eventually because of pressure from big business to gain more control of the market and because most people just want cheap, cheap, cheap. This is how BSE came about.

Unfortunately, they don't even want to think about the future you envisage, GusherING, just as they didn't want to think about health implications until it's too late.

Then, of course, there is the ludicrous and deleterious but perfectly unsurprising results of cartel-ism as detailed in
http://www.monbiot.com/archives/2005/05 ... rom-tesco/

The status-quo effectively amounts to legalised cartelling.

I don't see how protecting small business, who keep some form of competition, amounts to legalised cartelling. That could only come about, when there is no small competition.

[BarryW]

Removing the groceries order/ban on low-cost selling would be a serious mistake. This idea is another crazy idea which has its roots in PD economic quackery, and their love-affair with that obnoxious ****************************************** John Fingleton.

It doesn't take Einstein to work it out:
Large chains will undercut smaller retailers; eventually destroying their business and forcing them out of the market. A quasi-monopoly situation would eventually arise. Prices would fall in the short term, but rise incrementally as the large chains establish their dominant position.

So the Competition Authority is forcefully advocating an idea which will establish a near monopoly of a few large firms in the market for groceries!

The large groups, and others with vested interests (politicians in their pockets) have been very effective in pressing their case.
But you have to ask the question: Why on earth would a business want to sell at a loss, if not to exterminate their competition??
Page1 of a junior cert business text tells you that people enter business to make profit.

This is a quaestion that has yet to be answered by the PDs, the CA, or the fatcats who want the order scrapped

[thegeneral]

Removing the groceries order/ban on low-cost selling would be a serious mistake. This idea is another crazy idea which has its roots in PD economic quackery, and their love-affair with that obnoxious ******** John Fingleton.

It doesn't take Einstein to work it out:
Large chains will undercut smaller retailers; eventually destroying their business and forcing them out of the market. A quasi-monopoly situation would eventually arise. Prices would fall in the short term, but rise incrementally as the large chains establish their dominant position.

So the Competition Authority is forcefully advocating an idea which will establish a near monopoly of a few large firms in the market for groceries!

The large groups, and others with vested interests (politicians in their pockets) have been very effective in pressing their case.
But you have to ask the question: Why on earth would a business want to sell at a loss, if not to exterminate their competition??
Page1 of a junior cert business text tells you that people enter business to make profit.

This is a quaestion that has yet to be answered by the PDs, the CA, or the fatcats who want the order scrapped

I totally agree with Barry on this issue. I attended a recent debate on this issue and Fingleton was again harping on the need to abolish this order. It will considerably hurt and indeed close many of the small businesses in our community and lose valuable community structures in doing so. As I understand it a similar thing has happened with petrol in certain parts of Munster. The ability of the big supermarket chains to sustain a price war closed down the smaller independent rivals and the result? With no competitors the supermarket chain increases prices. While in the short term this would see prices drop, and benefit the lower socio-econbomic groups in particular, in the long term there would be a rise in prices.