An Unsurprising Result

Josh Wright —  16 September 2008

The Irish Competition Authority releases a report offering the stunning finding 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.” HT: Danny Sokol. The retail planning system apparently imposes restrictions on retailer size, location, and other dimensions of competitive activities. File this one as evidence in the Two Systems of Belief About Monopoly category. If somebody has not already done so, and I suspect they have, theres an economic history volume to be written about the long and perverse history of antitrust enforcement and regulation in the grocery retail industry.

UPDATE: The UK Competition Commission reaches a similar conclusion:

10.9 We find that a combination of one or more of the following features of certain local markets for the supply of groceries by larger grocery stores prevent, restrict or distort competition in connection with the supply of groceries by larger grocery stores in those markets:

(a) A significant number of local markets have high levels of concentration, and these high levels of concentration have in many cases persisted over a number of years.

(b) The planning regime (in particular, PPS6 in England, SPP8 in Scotland, PPS5 in Northern Ireland and MIPPS 02/2005 in Wales) and its application by Local Planning Authorities in accordance with the policy objectives of the planning regime necessarily act as a barrier to entry or expansion in a significant number of local markets:

(i) by limiting construction of new larger grocery stores; and

(ii) by imposing costs and risks on smaller retailers and entrants without preexisting grocery retail operations in the UK that are not borne to the same extent by existing large grocery retailers.