A code of conduct that would regulate the relationship between suppliers and the major retail chains may be introduced in the Irish Republic.

Enterprise Minister Mary Coughlan told parliament in Dublin last week she was considering proposals for a code that would ensure "a fair return to suppliers" as well as to consumers and multiples.

She was responding to opposition claims that Tesco had been squeezing Irish suppliers and denying them shelf space since it opted to cut prices in its border stores by importing international brands from the UK.

Labour Party frontbencher Willie Penrose, chair of a committee investigating grocery, last week alleged the shelf space for Irish brands had been reduced by 40%-60%, and some suppliers were now in difficulty. "A number were told unilaterally that their shelf space would be reduced overnight without explanation or negotiation."

Tesco had recently been reported to be making profits from its Irish operation "50% higher than elsewhere", he added, but was pressing Irish suppliers to take a cut of at least 20%. "Is that not a cause for concern?" he asked.

Tesco did not respond directly to the criticisms, but in full-page ads in the Irish Sunday newspapers pointed out it buys €2bn worth of Irish food every year, and added: "In every Tesco shop you'll find thousands of Irish brands. We have no intention of changing that."