Do grocery planning laws cost consumers?

A report by the Competition Authority said the retail planning system makes it difficult for new retailers to enter the market and for existing retailers to expand.

The report, based on the experience of the seven largest grocery retailers in Ireland from 2001 to 2007, said the planning system influences the type of retailers that trade in Ireland, where they locate, what they offer consumers and the prices that consumers pay.

Chairperson Bill Prasifka said: “The retail planning system limits competition among grocery retailers and as a result consumers are not getting the best possible choice or value for money.”

The authority said Ireland does not have any large scale grocery outlets or low cost grocery retailers that exist in other European countries as a result of these restrictions.

Discount retailers face more stringent limitations on size than other retailers resulting in less shelf space and less competition.

Following the Government’s decision to abolish the Groceries Order in March 2006, the authority was asked to review the structure of the grocery trade. The report recommends the removal of caps on grocery retail space and an end to the discrimination against discount retailers.

Musgrave group, the owners of the Centra and Super Valu brands, said yesterday it has serious concerns regarding the report.

It believes the grocery market is highly competitive and rejects the report’s conclusion that the planning guidelines restrict consumer choice and value for money.

“The report only evaluates part of the grocery market namely the seven largest retailers and takes no account of the choice provided by smaller shops in towns and villages around Ireland, which constitute almost a third of the grocery market,” it stated.

Environment Minister John Gormley, meanwhile, said he intends to initiate a review of the retail planning guidelines next year.

The report says 220 supermarkets opened since 2001 and floorspace has increased by 77%. Of 311 planning applications it studied, 70 were unsuccessful.

It said Lidl, Aldi and Dunnes Stores have been the most active in opening new outlets while Tesco, Dunnes Stores and Lidl have been most active in adding floorspace.

Irish Examiner

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