The decision to restrict the size of new supermarkets to 3,000 square metres (about 32,000 square feet), pending a review of the implications of largescale shopping centres, is a welcome development. RGDATA is confident that, when the effects of huge out-of-town retail complexes become more widely known, the cap will be made permanent.

We have only to look at the example of the UK to see the damage which results from the uncontrolled proliferation of huge out-of-town shopping centres. One town centre after another has been devastated as these superstores devour most of the retail trade for miles in every direction. They also generate large increases in traffic volumes, as the only way to reach them is by car.

By the time the British government woke up to the damage being caused, and imposed planning restrictions on these developments, it was too late.

It is difficult for us in Ireland to appreciate the sheer size of these out-of-town supermarkets or superstores, as they are sometimes known. At 80,000 square feet (almost two acres of floor space) or more, they dwarf anything which at present exists in the Republic, where the average supermarket size is in the 20-25,000 sq ft range.

The British food retailers have concentrated most of their activities in a relatively small number of such huge outlets. These are stocked through a centralised distribution system, with suppliers making their deliveries to a single retailer-owned warehouse from which the retailer in turn transports the goods to the superstores.

A combination of centralised distribution and superstores has allowed the UK food retailers to generate tremendous economies of scale. If those had been passed on to customers in the form of lower prices, RGDATA would no doubt be accused of seeking to promote its members' interests at the expense of the consumer.

However, those economies have not been passed on to customers. In March of this year RGDATA carried out a price survey of Irish and UK food retailers. It took a trolley of 60 popular items. Adjusting for exchange rates, the trolley cost IR£81.05 in Dunnes and £81.32 in SuperValu. In Britain, we paid IR£96.64 in Tesco and IR£97.15 in Sainsburys.

This price differential has been confirmed by other more recent surveys carried out by other organisations.

It is not just RGDATA which says that the British food retailers are charging their customers over the odds. In the UK, the Office of Fair Trading has announced that it is to carry out an investigation into British supermarket prices.

So, if the customers are not benefiting from these economies of scale, who is? A quick glance at the accounts of any of the British food retailing "big four" of Tesco, Sainsburys, Safeway and ASDA demonstrates conclusively that it is the shareholders, not the customers, who are pocketing these gains.

All of the UK food multiples enjoy extremely high operating margins. These range from 6.15 per cent at Sainsburys to 5.42 per cent at ASDA. Irish operating margins are much, much lower, with those at Tesco Ireland being just 4.4 per cent, while Musgrave's operating margin is 2.95 per cent.

Not alone are these economies of scale not being passed on to the consumer in the form of lower prices, they also come with hidden costs attached. These are primarily increased pollution, traffic congestion and urban blight in existing town centres.

Two of the main policy initiatives pursued by the Department of the Environment in recent years have been urban renewal and, through the National Roads Authority, a major programme of upgrading the national road network. Both policies have achieved considerable success. Our city and town centres have not been in better condition for decades, largely due to the urban renewal tax incentives, while the standard of our national road network is gradually reaching acceptable levels.

However, allowing the development of superstores would result in much of this infrastructural investment being squandered. The huge volumes of business which they would gain at the expense of city and town centres would very quickly result in most of the benefit of the £2.3 billion plus investment in urban renewal being lost.

Such enormous retail outlets would also have major implications for the future of the road network. The investment in new roads has focused on reducing travelling times between our major cities and towns. Allowing superstores to be built would frustrate this aim, as large sections of the road network would become clogged with shopping traffic travelling relatively short distances.

Indeed, there are signs that this is already happening, most notably on the M50, along which there are two existing regional shopping centres, with at least two more planned.

Restricting supermarket size to 3,000 square metres/32,000 square feet is a reasonable response to the damage which superstores are capable of causing. The cap both protects the environment and ensures that retail competition is maximised so that the consumer pays the lowest possible prices. Lifting the cap would destroy our city and town centres, clog our roads with unnecessary traffic, raise pollution levels and increase prices. The sooner it is made permanent the better.

Michael Campbell is director-general of RGDATA, the independent grocers' association