At the end of 2008, there was a wide gap in the retail price between the Republic of Ireland and Northern Ireland. Retailers claimed that a large portion of the price difference was because suppliers in the sterling zone were not passing on the benefits of the fall in the value of sterling.
As a result, the Competition Authority was asked to examine the distribution of imported retail goods and how competition affected their supply and distribution. The report (published June 2009) focused on the grocery, clothing and pharmaceutical sectors.

We found that suppliers often charge retailers in the Republic of Ireland more than their Northern Ireland counterparts. However, the report also showed that increasingly price-sensitive consumers were shopping differently and forcing retailers and their suppliers to react and lower their prices.

A retailer’s decision to react and reduce prices depends on the level of competition in the retail sector and the retailer’s ability to change suppliers or negotiate price with their suppliers. The pharmaceutical sector was found to be the least likely to react because of strict Government regulation of medicines.

Other factors that contribute to higher retail prices in the Republic of Ireland are the high cost of doing business, the planning laws, higher disposable incomes and incomplete exchange rate pass-through.

To ease the situation, we recommended that the Government reduce the cost of doing business in Ireland and reform the retail planning guidelines. We also recommended a reduction in the mark-up paid to pharmacies for medicines under the State’s Drugs Payment Scheme. In July 2009, the Minister for Health and Children implemented a reduction in the mark-up; this will reduce drug costs for the State and may also reduce the price for private consumers.