At the end of 2008, there was a wide gap in retail prices between the Republic of Ireland and Northern Ireland. The Competition Authority was asked by the then Minister for Enterprise, Trade and Employment, Mary Coughlan T.D., to find out what was driving this gap.
We found that suppliers often charge retailers in the Republic of Ireland more than their Northern Ireland counterparts. However, we also showed that consumers have become increasingly price-sensitive and this is forcing retailers and their suppliers to lower their prices.
A retailer’s pricing decision depends on the level of competition and the retailer’s ability to switch supplier or negotiate price with current suppliers. The pharmaceutical sector was found to be the least likely to reduce prices because of strict Government regulation of medicines.
To ease the situation, we recommended that the Government reduce the cost of doing business in Ireland and reform the retail planning guidelines. We also recommended a reduction in the mark-up paid to pharmacies for medicines under the State’s Drugs Payment Scheme.
In November 2010, the Government signed a Memorandum of Understanding (MoU) with the EU/IMF/ECB Troika. The MoU included a commitment by the Government to conduct a study on the economic impact of eliminating the retail floor space cap with a view to enhancing competition and lowering prices for consumers. Read about Ireland’s EU-IMF Programme of Financial Support.
The study was conducted by Forfás and recommended some adjustments to the caps to reflect the need for larger retail space in Dublin and other large cities. Read the Forfás Review on Economic Impact of the Retail Cap
New Retail Planning Guidelines published in 2012 contain the following caps:
4,000m2 in the four Dublin local authority areas (i.e. Dublin City, Fingal, South Dublin and Dún Laoghaire-Rathdown County Councils);
3,500m2 in the four other main cities of Cork, Limerick/Shannon, Galway and Waterford; and
3,000m2 in the remainder of the State (i.e. those areas outside of the four Dublin local authority areas, and the cities of Cork, Limerick/Shannon, Galway and Waterford.