The State’s competition watchdog has opened a formal investigation into the Restaurants Association of Ireland (RAI) over an industry campaign to encourage the charging of non-refundable deposits on “no-show” customers.

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The Competition and Consumer Protection Commission (CCPC) this week brought in senior representatives of the trade group for interview, after opening a formal case on November 1st.

The issue of no-shows – people who make bookings but fail to show up, leaving restaurateurs out of pocket with unsold tables – has returned to the spotlight within the trade as it enters the busy Christmas period.

The RAI raised the issue in January media interviews, after many members complained that increasing numbers of no-shows over Christmas last year deprived them of revenues during a crucial period.

Adrian Cummins, chief executive of the RAI, suggested in a radio interview that restaurants take deposits at the time of booking and levy a charge on customers who don’t show. He suggested €20 might be “fair”.

Sample policies

The RAI also circulated to members sample policies and it surveyed restaurants on policies they had in place. Many restaurants have such policies already, especially in high-demand city eateries, but there is no consistency in the trade.

The CCPC first contacted the association earlier this year expressing concern. It has no objection to individual restaurants deciding to charge no-shows, but it told the RAI that any attempt by a trade body to co-ordinate action across the industry would be in breach of competition law.

The RAI denied any wrongdoing and argued it was simply highlighting an issue of concern to its members, many of whom are small businesses. The CCPC demanded it sign up to a number of measures, including that RAI staff undergo competition training and that it regularly report to competition regulators.

Deteriorated

Relations between the sides have since deteriorated, however, and the CCPC opened its formal case against the RAI this month. The RAI confirmed that summonses had been served on it but said it was advised not to comment further.

The CCPC said the RAI has “failed to date” to address its concerns. It confirmed it had opened a formal investigation: “Under competition law, a trade association must not attempt to co-ordinate the conduct of its members, for example, by advising, recommending or suggesting... the terms and conditions under which a service should be provided or the price that should be charged.”