The Government yesterday made permanent a temporary cap on the size of retail outlets. This was despite the advice of the Competition Authority, which advised against the restriction on the basis that it would prevent the entry of new competition into the market.
Yesterday's move by the Minister for the Environment and Local Government, Mr Dempsey, extended the floor space cap in Dublin to 3,500 square metres from 3,000. The 3,000 square metres limit outside the greater Dublin area remains.
In a statement, he said: "The guidelines will ensure that the future development of the retail sector in Ireland will accord with the principles of sustainable development while at the same time facilitating a competitive retail sector which can only benefit the consumer."
The Competition Authority's position was that competition fostered cheaper prices for consumers.
The contrary view was that unfettered competition would lead to large predatory companies killing off smaller, local businesses.
The Department cited a study by Goodbody Economic Consultants, which said the restrictions were not in conflict with domestic or EU competition law. It acknowledged, however, that Goodbody's report said the move had the potential "to raise retailing costs and consumer prices and reduce competition".
Yesterday's decision was welcomed by Tesco, which said it would provide clarity around the scope and terms of permitted retail development.
RGDATA, which represents small retailers, and Musgrave group, which controls the Centra and Supervalu chains, also welcomed the cap. Dunnes Stores's spokesman said it had no comment to make.
Mr Dempsey's spokesman said no large British-based superstore operator - such as Sainsbury or the US-owned WalMart - took part in consultations of the draft proposal. Both groups have been named as possible market entrants into the Republic.
Mr Dempsey said the higher cap in Dublin reflected the greater size and population density in the area - and the close proximity of residential areas to established town centres.
The decision reflected five "fundamental" policy objectives. These were:
all development plans should incorporate clear proposals for retail development, including floorspace caps; the planning system should facilitate a competitive and healthy environment for the retail industry;
retail developments should be promoted in locations that are readily accessible, particularly by public transport;
retail planning policy should seek to support the continuing rise of town and district centres which will reinforce investment in urban renewal;
to ensure that national roads and motorways can fulfil their regional and national transport roles there should be a presumption against the location of large retail centres adjacent to such roads. This was because they can lead to inefficient use of such infrastructure.
