The Competition Authority has called for the lifting of the cap on the size of retail grocery stores to allow for the construction of hypermarkets and to encourage new entrants to the market.
It says ending restrictions on the size of grocery stores would help drive prices down for consumers without costing the Government any money. A failure to reform the retail planning system would see further flight of consumers to shops outside the Republic, it warns.
“Under the current system, people are voting with their feet. Just look at the queues of people going to Northern Ireland to do their shopping,” said Bill Prasifka, chairman of the authority.
Minister for Environment John Gormley noted the recommendations in the report and restated his intention to review the retail planning guidelines next year.
According to the authority, the planning system restricts both the size and location of grocery retail outlets. Uncertainty surrounding the granting of planning permissions can also raise the cost of building new shops as well as delaying their arrival.
“These factors limit competition between retailers and also between grocery brands. Together they restrict consumer choice and value for money.” As a result, Ireland does not have any large-scale, low-cost grocery retailers such as are found in other European countries.
Under the current retail planning guidelines, which have been in place since 2001, a 3,500 sq metres cap applies to large food stores in the greater Dublin area; in the rest of the country, the cap is 3,000 sq metres. Mr Prasifka says such a “blanket ban” on larger stores is disproportionate.
He also claims a separate cap of 1,000-1,500 sq metres on the size of discount food stores is discriminatory and should be removed.
In a further recommendation, the authority says an assessment of existing levels of competition should be carried out when local authorities are preparing development plans. It also says local authorities should survey consumers to give them a voice in the planning process and provide a balance against more powerful producer interests.
The report says that 220 more supermarkets have been opened since 2001 and floorspace has increased by 77 per cent. Of 311 planning applications it studied, 70 were unsuccessful.
However, appeals almost double the average time to gain planning permission, and the report notes that three-quarters of Tesco applications are appealed, often by rival retailers, compared to one-quarter of developer-led applications. As a result, it says ways should be found to limit appeals by competitors.
“We’re not saying that rights should be taken away from people,” said Mr Prasifka, “but we need to recognise the potential for using the planning process for anti-competitive ends.”
The authority says the recommendations do not require a sea-change in planning but rather a “refocusing” of planning policy on competition and consumers.
