Minister Micheál Martin’s Opening Address at the “Checkout” Conference

25 ^th January 2005

I am very pleased to have been given the opportunity to open this conference today.

The retail grocery sector forms a key part of the Irish economy both in terms of the people it employs directly and the jobs it provides in the associated manufacturing, supply and distribution sectors.

The grocery sector has been encountering major changes in Ireland in recent years.

One significant development has been the entry and continued expansion of the German discounters, Aldi and Lidl. Other players, such as Tesco, have expanded their operations in Ireland by extending the number of 24 hour outlets and selling a wider range of goods, including petrol. These factors reflect the lifestyle changes of Irish people in recent years.

The expansion of the multiples has increased competition in the sector and given consumers more choice. While I welcome any measures that provide additional competition and benefits for consumers, I also recognise the important role played by the smaller operators in the sector.

In this regard, I am pleased to see that many of the independents and non-multiple groups have responded to increasing competition by making substantial investments in their operations, through the opening of new format stores and the stocking of a wider range of goods to accommodate the changing needs of Irish consumers. Not only will this investment create vital local employment with associated benefits for the economy, but it will also increase the choice and convenience available to consumers.

Competition is vital to all sectors of the economy. It forces firms to innovate and to strive for efficiencies thereby generating benefits for the firms themselves and for consumers in terms of increased value, quality and service. I’m sure you would agree that firms in a competitive market who fail to innovate are not likely to prosper in the long term.

I recognise that competition is only effective, however, if it provides real choice for consumers who must, in turn, be able to exercise that choice in an informed manner to seek out the best value for the products or services they require. The retail sector is as important to the consumer as the consumer is to the sector.

For this reason I am very anxious not just to encourage greater competition in the retail sector, and indeed in all sectors of the economy, but I am also determined to bring about changes that will improve and promote consumer rights in Ireland.

You will all be aware of the work of the Consumer Strategy Group which was established in March last year to advise on the development of a new consumer policy for Ireland in the years ahead. I expect to receive the Group’s final report in the next few weeks and I look forward to considering the findings and recommendations in consultation with my Government colleagues.

The Terms of Reference given to the Group were extensive and I expect it to comment on a wide range of issues. I know it is looking at means to create a more effective consumer lobby in Ireland and by so doing to provide a stronger voice for consumers as well as a consumer input into the decision making process at both central and local Government level.

I know also that the Group is looking in detail at the institutional and legislative structures that govern the consumer agenda in Ireland.

While the work of the Group is clearly in its final stages, I am not yet aware of its findings nor do I wish to speculate at this stage what recommendations it might make. I do not rule out, for example, the possibility that the Group will comment in some form or other on a topic which I imagine is close to the heart of some people here today and that is the Groceries Order. However, if it does, I expect it to be just one of many aspects to the Group’s Report.

Obviously, all the Group’s recommendations will have to be carefully considered before I bring any proposals to Government in the matter.

While it is clear that the Consumer Strategy Group will be taking a strictly consumer perspective on matters directly relevant to the retail grocery sector, I do not believe that the sector has anything to fear either from the Report or as a result of current EU or Government thinking about the way in which the sector should be regulated. For one thing, I am very firmly of the view that better regulation should not necessarily mean more regulation or be equated in any way with excessive regulation, either of which imposes an additional burden on business and damages the overall competitiveness of the economy.

You will all be aware that there is a large body of consumer legislation in place governing the retail sector in Ireland and that this legislation imposes rights and obligations on both consumers and business. A large part of this legislation goes back a long way, more than a hundred years in many cases, and has become outdated and anachronistic. Because of the way the law has evolved over time, it is comprised of a variety of both primary and secondary legislation. In the past twenty years or so, much of the law has emanated from Brussels in the form of EU regulations and directives.

In view of the diverse and often confusing nature of this legislation, my Department is currently engaging in a major review with the aim of consolidating all of this legislation in a concise, comprehensive and clearly understood fashion. It is a massive undertaking involving at times tedious research but I am confident that the final product will be beneficial to consumers and traders alike.

In the course of this exercise, we will take on board the terms of the new Unfair Commercial Practices Directive which I hope will be adopted by Member States in Brussels in the first half of this year. The Directive is currently undergoing a second reading in the European Parliament before coming back for consideration by Member States at Council level, probably in June.

The Directive will list some thirty or so practices, mainly relating to aggressive or misleading sales techniques, that will be outlawed in all 25 Member States of the Union. Many of the provisions of the Directive will constitute a restatement of existing law and the overall impact of the of the new provisions will be to protect consumers by making life more difficult for unscrupulous traders.

Reputable business will, I believe, welcome the new provisions which are primarily aimed at eliminating unfair competition from what might be called “scam merchants.”

Since the introduction of the Euro, there has been much public and media comment that Ireland has become a high price economy and an expensive place in which to live and do business. Indeed, the growing perception of a “rip-off” culture, with prices significantly higher than in the UK and the eurozone, contributed to the Government’s decision to establish the Consumer Strategy Group in the first place. It is another issue I expect the Group to address in its final Report.

I am not about to prejudge the Group’s findings. But I do acknowledge that firms often face higher costs in Ireland. Nevertheless we need to keep our price levels more in line with international standards in order to maintain our competitiveness.

The Government is playing its part in reducing such costs through a commitment under the current Programme for Government to the pursuit of a programme of regulatory reform aimed at the removal of unwarranted restraints on competition. The Government’s insurance reform programme has been instrumental in bringing about significant reductions in premiums across all forms of insurance. I believe that there is more that can be done in the area. I will, for example, continue to look at how we might attract more insurance providers into the Irish market and in so doing further drive down insurance costs for business.

There is little doubting the importance of the retail grocery sector to the Irish economy. It is a major employer and, as a sector, as played its part in recent years in adapting to market trends and in responding to consumer demands and behaviour. But whatever your business, there is never room for complacency. Standing still is not an option. There is a need to be constantly innovative, always looking for new ways of doing business, forever striving for increased productivity and efficiency. I urge you all to look to the future with those aims in mind.

And for my part, I look forward to addressing the many challenges that lie ahead for this dynamic sector.

ENDS/ETE 1304