Tuesday, September 16, 2008
Irish Competition Authority Report Finds Competition between Grocers is Limited by the Retail Planning System
Posted by D. Daniel Sokol
The Irish Competition Authority released a report this week on competition in the supermarket sector. As regular readers of this blog know, supermarkets are hot topics in the US, UK, Australia, Chile and Ireland. In the Authority's press release, we learn that:
“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”, according to Bill Prasifka, Chairperson of the Authority.
The report has found that the planning system has influenced the type of grocery retailers that trade in Ireland, where they locate, what they offer consumers and the prices that consumers pay. Despite growth in the number and size of grocery retail outlets in Ireland since 2001, the planning system acts as a barrier to competition in grocery retailing in three ways;
1. Restrictions on the size of a grocery retail outlet.
2. Restrictions on where a grocery retail outlet can locate.
3. The uncertainty regarding planning permission can raise the cost and delay the arrival of a new retail outlet.
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, as exist in other European countries; discount retailers face more stringent limitations on size than other grocery retailers; size restrictions on grocery retailers result in less shelf space and subsequently less competition between branded goods; and consumers all over the country are denied the benefits of competing grocery retailers in their local area due to prolonged planning delays.