RetailingThe legislative amendment currently being drafted in the Department of Environment to pave the way for an Ikea store in Ballymun will have to be specific to the Swedish furniture giant's unique retailing format if it is to avoid legal challenge.
Minister Dick Roche told The Irish Times that he intended to make a special exemption to the cap on retail warehousing but only in an area designated for urban regeneration.
He said: "Note that I'm talking about an area singular, not areas plural." His comments indicate the proposed relaxation of the limit on superstores will only benefit Ikea although Mr Roche stressed the Government could not alter legislation to facilitate a company's interest.
However he also said the legislative amendment would have to be "tightly worded" to ensure the floodgates were not opened to large-scale out of town retailing.
"We certainly don't want to see the sort of developments that have sucked the life out of town centres in other countries, that is one thing we're determined to avoid," he explained.
But legal sources claim the Government cannot adjust planning laws on the basis of a geographic classification. One source who works closely with the Department said: "You can't say to retailers that the planning restrictions apply everywhere apart from this corner here coloured pink.
It's unprecedented in our legislation and is wide open to legal challenge by other companies and creative developers who are hoping to benefit from any relaxation of the cap." There are also concerns that an exemption on the floorspace cap allowing Ikea into a designated urban renewal area could contravene EU state aid rules, which govern the granting of state financial or economic aid to businesses.
Officials drafting the legislative amendment are understood to be concentrating on defining Ikea as a specific retail format which would have to comply with the general planning principles of sustainable development.
According to legal sources, Ikea's famous flat pack furniture offering could be defined under a separate category and still be consistent with the current planning legislation.
As one source commented: "The guidelines already make a specific provision for discount retailers and there are only two of them in the country so defining Ikea by its format is the only way the Government can enable Ikea to open here without also having to make exceptions for other superstores." The scale of Ikea's flat pack furniture business is regarded as unique in the retail industry and legal sources are confident a specific provision describing the Swedish company's retail formula will not enable other companies to challenge the cap exemption.
Costco, which may trade out of the Ballymun location alongside Ikea, is also separately defined under the retail planning guidelines as a membership warehouse club and is not subject to floorspace restrictions.
Lobby groups opposed to any alteration of the retail warehouse cap have consistently pointed out that the Swedish furniture giant was never catered for under the 2001 retail planning regulations.
They argue the debate over the cap would never have arisen if Ikea had been separately defined in the legislation.
But international retailers who have long sought an increase in the floorspace cap have been quick to register their concern at a once-off exemption designed to benefit Ikea.
