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Abstract
This paper traces the emergence, evolution, and demise of below cost legislation in the grocery industry
in Ireland. The paper explores retail buyers’ views of the Grocery Order (1987) and the effect, if any, it had on
grocery buyer behaviour, competition among retailers, and vertical competition along the food chain until it was
repealed in 2006. It addresses the matter of buyers’ likely response to the Order, had it remained in effect, in the
current depressed market environment. Views of independent retailers are also provided on the Order. The paper
finds that grocery buyer behaviour was determined by the buoyant consumer market and that the Groceries Order
acted to depress competitive forces and direct supplier-buyer negotiations to off-invoice variables. Had the Order
remained in place, the effect of the rapid decline in the economy, accompanied by the rapid rise of the discounters’
share of the market, the growth in cross border shopping, and the dramatic fall in the value of sterling would have
ensured that buyers developed new sourcing models which would have made the legislation redundant. The paper
concludes that the legislation did not work to the benefit of shoppers but assisted the imposition of a form of quasiresale
price maintenance by suppliers, which suited suppliers and retailers alike in a time of economic buoyancy. The
paper endorses the Government’s decision to rescind the order and remove an important constraint in both vertical
and horizontal competition.