A new grocery survey by the National Consumer Agency shows the market is dominated by four big multiples in the supermarket sector which offer consumers only marginal price differences on branded goods.
The situation has now been described as being akin to a cartel by Fine Gael spokesperson on agriculture, fisheries and food, Andrew Doyle TD.
“The drop in prices on branded products of 14 per cent in the 18-month period covered by the survey is significant but it is quite clear from the level of price matching that, despite the phoney price war waged by supermarkets, their pricing structure more closely resembles that of a cartel than a properly competitive market,” said Deputy Doyle.
He added that there was a mismatch between commodity price falls and supermarket prices. “For example in 2008 a 34 per cent fall in farm gate prices for milk saw the price of a litre of milk in the supermarket only drop three per cent, showing the bulk of the profit was taken by the supermarket at the expense of the producer and the consumer. This is not an isolated incident.
“It is difficult to believe the supermarkets have taken the hit for the 14 per cent fall shown in today’s survey and there is every reason to believe that they continue to rip off both shoppers and farmers.
“However, the veil of secrecy over supermarket profits means we still don’t have transparency on where the margins are going on these products. Fine Gael price surveys have shown mark-ups of up to 250 per cent on basic products between the farm gate and the supermarket shelf.”
Deputy Doyle concluded that the survey strengthened the case for an Office of Fair Trading which would merge the Consumer Agency and the Competition Authority.
“It is clear from today’s report that the dominance of four big players means they can effectively carve up the market between them and ultimately prices will creep back up. When price surveys throw up obvious competition issues, it makes sense for this to be the responsibility of one office. Fine Gael has also published Fair Trade legislation which would compel supermarkets to disclose their profits which would introduce a level of transparency that can only benefit competition and ultimately the consumer,” he said.
