Irish retailers are likely to increase the amount of goods they source from outside Ireland, according to Cork-based retail group Musgrave, if the Department of Enterprise, Trade and Employment's code of practice on the grocery sector is introduced.

The owner of the SuperValu and Centra brands said "the proposals are likely to increase the cost of goods in the Republic of Ireland", meaning some retailers will instead opt to source their good from abroad.

"This would reduce the bargaining power of Irish suppliers even further," the retailer's submission on the code states. "Irish retailers have had genuine difficulties in securing the benefits of sterling's weakness from international suppliers and passing on these benefits to Irish consumers," it said.

It added that many "suppliers are larger than most retailers active in Ireland and actually have greater economic power than the retailers or wholesalers they are taking issue with".

The submission also expressed concern "that the proposed code would predominantly police those retailers and wholesalers that have continued to source from and support Irish suppliers, adding a significant administrative cost to these retailers". Three quarters of everything sold in SuperValu and Centra is sourced in Ireland.

Musgrave also warned that as sterling continues to move toward parity with the euro, Northern Ireland will become an even more attractive shopping destination for southern shoppers. The retailer has made an initial approach to suppliers, through IBEC's Food Processors and Suppliers Group, proposing that an independent chairman be appointed to a cross-sector panel to help address concerns.

Musgrave said it has no objection to a code if it is reciprocal and balanced.