He would, he decided, listen to the calls of the Consumer Strategy Group and, probably as importantly, of televangelist Eddie Hobbs. This time, he would throw out the Groceries Order.

The controversial order had already been the subject of several reviews, but previous holders of Martin's office had backed off from overhauling regulation of the grocery industry. This time, Martin was going to go for it.

From tomorrow, the controversial Groceries Order will be formally repealed by the Competition (Amendment) Act, which was signed into law this weekend. The theory is that the change will bring cheaper prices at the checkout. But the verdict is out on that score, with a babble of competing views vying for airtime in an emotional debate.

What seems absolutely certain is that Irish suppliers to the multiples will come under greater major pressure.

Margin pressure is already part and parcel of their daily business. The food industry is already "hugely competitive", says Michael Carey, chief executive of Jacob Fruitfield. "We haven't had price increases on that side in years despite the fact that our input costs have been going up significantly."

It's a tough business, says John Mohan, managing director of Ireland's largest egg supplier, Monaghan-based Greenfield Foods, which supplies between 30% and 35% of all eggs to the Irish market, shipping about four million eggs a week. Margins on eggs are already less than 2%, he said. Higher-end enriched eggs attract margins of about 4% but account for just 1.3% of turnover.

"When costs go up you just have to go in and negotiate with the retailers, " Mohan says. "No retailer wants you to put up your prices, they want you to take them down. But we're in business and we have to make a margin, so you have to fight the battles as they come and make your case."

Supermarkets will now be able to negotiate whatever discounts they want with suppliers and sell goods on to consumers at whatever price they choose.

Irish suppliers are in a lather.

Suppliers to the multiples are worried that supermarkets embroiled in an ongoing cutthroat battle for market share will exert a tighter squeeze on them in an expensive operating environment. And they are also worried that their cash flow may be hit hard by another change in the law tomorrow.

Martin decided that a provision of the Groceries Order requiring trading on fair and reasonable terms was unnecessary, given the existence of European law requiring prompt payment. Sources said suppliers now believe that supermarkets may change some of their credit terms.

The new legislation also outlaws 'hello money', but only where it is shown to be contrary to competition. And it bans so-called 'off-invoice discounting', where suppliers give retailers discounts not shown on their invoices.

The argument against off-invoice discounting was that these price reductions could not be passed on to consumers and placed upward pressure on prices. The report of the minister's officials did not make a judgement on whether this was true, but found that on balance it probably was.

The basic argument in favour of the overhaul is compelling. It holds that the Groceries Order was a relic of a protectionist era. Calling for change in the system were groups including the Consumer Association, the supermarkets, government and the ubiquitous Hobbs.

Lobbyists against change included RGData, the representative group for grocers including the major Irish symbol groups, and in turn wholesaler Musgrave. The lobby group argued when the bill was introduced that it was "so onesided and imbalanced in favour of the larger multiples that it legalises unfair trading in the retail grocery trade".

At a recent industry conference, C&C chief executive Maurice Pratt called the new bill "backward-looking", and charged the government with failing to tackle the real issues causing problems in Ireland. "My personal view is that sectors and businesses which are not performing should not be propped up, but that the government should tackle the areas that they are directly responsible for where costs have significantly increased, " he said.

Jacob Fruitfield's Carey predicts that the changes to regulation of the sector will lead to "instability", but won't make the grocery market more competitive."What I think it will do is lead to some instability in the industry, where retailers may in the short term introduce some discounts."

One supermarket industry insider suggests the new act will change how multiples use their marketing budgets.

Traditionally, retailers set money aside to support specials such as a weekend mark-down on beef or lamb or other fresh produce. He predicts that marketing spend may switch to special offers on top-label brands such as well-known cereals.

"What you could see is products such as that being sold during specials at half-price and I don't think that that's going to help the Irish agricultural business, " he said. "I think that you'll see volumes on the fresh produce side fall off at stores because there won't be as many special offers on those categories in future."

Tom O'Connor, head of business development at research firm Mintel Ireland, suggested that suppliers who can't cut it are "likely to be out on their ear. . .

The only way a producer in Ireland can project four- or five-year plans is if it's doing tie-ups with the multiples, " he suggested. "But you have to play ball.

You have to do what they want."

Cormac Hughes, consultant partner with Deloitte & Touche, believes the government move will largely be good for consumers. But he warns of some dangers. Retailers will be putting pressure on suppliers that in turn will pass on to producers, he suggests.

"We're now part of a Europe-wide supply chain so if a product is reasonably transportable from elsewhere, the economics of producing it in Ireland become quite challenging."

The target for government is a checkout pay-off for consumers. Latest CSO figures show falling grocery prices, but there is still a widespread perception that shoppers are paying too much. It will take time to see whether this turns out to be the case.

The anti-change lobby argues that the supermarkets will simply squeeze suppliers and pocket the extra profit they reap from more stringent deals with suppliers. Even Micheal Martin has steered carefully away from taking the risk of claiming that the new law will bring reduced prices.

In the short term, there is likely to be a phoney war as the supermarkets map their strategies. And industry sources suggest these strategies may vary wildly. The player seen as most likely to slash and burn prices in the short term is Dunnes Stores, with Tesco expected to take a less straight-up approach.

Watching the big boys closely will be the likes of Superquinn.

There have been predictions of doomsday scenarios for suppliers including half-price milk offers by Dunnes, though some sources say these are unrealistic. Watch this space.

Advocates of change argue that the Groceries Order was a relic of the protectionist era of the 1950s, that the carping going on at the moment is the same kind of complaining that goes on any time an industry is overhauled. Think newspapers, think telecoms. But this change won't happen without pain for Irish companies, and quite a lot of it.

DISTRIBUTION THREAT

THIS WEEK'S change in the law is not the only new pressure likely to face Irish suppliers to the supermarket multiples over the coming years.

Over the past few years, the multiples have been accelerating their push into centralised distribution, which helps to streamline ordering and deliveries and strip away overheads. But meeting the needs of centralised distribution systems is challenging for small suppliers, as they need to be able to deliver substantial volumes.

Just one major supermarket multiple, Dunnes Stores, now operates without a central distribution model. Dunnes is rumoured to be seeking a site to open a major centre, and the company is already attempting to cut its distribution costs.

Last week, the Sunday Tribune revealed details of a major High Court battle between Dunnes Stores and one of its distributors, Whelan Frozen Foods, which threatens over 470 jobs at the family company. Dunnes Stores has attempted to slash margins paid to Whelans, a move the distributor is opposing.

Superquinn opened a 35m, 170,000 square-foot central distribution centre in Blanchardstown, Dublin, in 2002, while Tesco invested roughly 30m in a centre off the M50 motorway in Dublin that opened in 2003, and is now planning a 70m distribution centre in Donabate, north of the capital. Musgrave recently built a 35m distribution centre in Kilcock.

Last year, a joint Oireachtas committee said that central distribution can "eliminate local suppliers of produce as they may not have the scale to supply a central warehouse".

But the committee also noted an upside to the trend. It found that central distribution "may make it easier for producers or producer groups to sell to multiple supermarkets" because such centres eliminate the need to deliver to individual shops and cut overheads as a result.