The Competition Authority has estimated that the Groceries Order, which bans below-cost selling, costs the average Irish household up to €481 a year.
In a submission to the Enterprise, Trade & Employment Minister Micheal Martin published today, the authority calls for the removal of the order.
Authority chair John Fingleton said the order pushed up food prices and was against the interest of consumers and the economy.
'The successful prosecution of two supermarkets in January 2004 for providing discounts on baby food is a perfect example of why the Groceries Order needs to be abolished. If this logic was applied in other sectors, for example clothes, it would make post-Christmas sales a criminal activity,' he added.
In an analysis carried out for the submission, the authority found that food prices had risen by just under 10% between 2000 and 2004, while prices of clothing and footwear had fallen 16% and household durables prices had dropped 4%.
The competition body said business costs could not be blamed, as rents, insurance, waste charges, electricity and wages were common across all retail sectors. It added that farm gate prices had remained stable in the period, and could not be blamed.
The authority said that food prices had stabilised in recent years - although at a higher level than in other countries - but it attributed this to increased competition following the arrival of Aldi and Lidl in Ireland.
It found that prices of food items covered by the Groceries Order has risen by 7.4% since June 2001, while items not covered had declined in price by 5%.
