The Irish Republic has lost almost half its independent grocery retailers in the past five years, with the total now standing at 3,500, according to a report just published by the country's Competition Authority.

Over the same period the number of supermarket outlets has doubled, driven by the major players in the €11.6bn-a-year market - Tesco, Dunnes and Superquinn.

The report described the decline in the number of independents as "a consistent factor of the recent past", and warned: "We see no change in that trend."

However, while expressing concern at the lack of competition in the market following the abolition of the groceries order, Competition Authority chairman Bill Prasifka claimed this could not be attributed to the loss of independents.

"The disappearance of independent shops is not necessarily an indication of a lack of competition but of rationalisation within the sector," he said. "The market is working very much in line with international trends."

The Competition Authority, when headed by the current OFT boss John Fingleton, predicted that lifting the below-cost selling ban would save €500m a year on shopping bills.

Asked why that forecast was so far off the mark,

with food prices soaring in the two years since the order was abolished, Prasifka blamed the world markets and claimed the Republic would be worse off if the ban was still in place.

The report also noted a potential cause for concern in the fact that two companies, Musgrave and BWG, controlled 80% of the independent wholesale market, worth €3.6bn in 2006. Such dominance, it said, could make it difficult for newcomers to enter the market and required continued monitoring.

Trade and employment minister Michael Martin will now consider the findings before deciding on a course of action.