As the German discount supermarkets Aldi and Lidl have found in the morass that is the Irish planning system, das Leben ist kein Ponyhof. Life is no pony farm. They allege their rivals – mainly Tesco, SuperValu and RGData, lobbyists aligned with the former – blatantly use the system of planning objections to slow down their advance.
Lidl and Aldi separately complain that between 75 per cent and 80 per cent of their planned new stores and extensions are the subject of objections from their rivals, the overwhelming majority of which are ultimately not upheld by planners.
Yet this isn’t a new thing. The planning system has always been treated as a weapon to be deployed between rivals in the grocery sector. Using planning objections to stymie your competitors might be tough tackling but it appears to be how the game is played in Ireland.
The practice even helped to spawn a report from what was then the Competition Authority (now the Competition and Consumer Protection Commission) more than a decade ago.
Nothing changed then. What is different now?
This week, Lidl welcomed permission for a new store from planners at Galway City Council. Lidl noted, however, that RGData and Tesco both have objections on file, giving them the option of taking an appeal against the proposed new store to An Bord Pleanála (ABP), which would slow things further.
Last week, it was Aldi's turn. ABP rejected an appeal against a new Aldi near the promenade in Tramore, Co Waterford, by a local company, Leeside, which is controlled by the Quish family who run the SuperValu in the town. Leeside, meanwhile, obtained its own planning permission for a discount supermarket in the car park of SuperValu.
Aldi has also been stymied in Bray, where a barrage of identical objections from staff employed at SuperValu across the road, as well as the local Tesco, helped scupper an application in 2015. The site, bought for €5 million at the height of the recession, is now a derelict eyesore nurturing a weed jungle in the commercial heart of one of the most bustling towns on the outskirts of Dublin.
Aldi is still holding out for planning in the face of objections from rivals in Monaghan town and Dunshaughlin in Meath, while it recently won in the likes of Malahide and Laytown.
Lidl, meanwhile, has in recent years won ABP scraps over RGData objections in Mitchelstown, Greystones, Drogheda and Swords.
This is truly a countrywide battle.
The discounters’ rivals plead innocence over their intentions. RGData, viewed by some within the industry as the political wing of SuperValu’s owner Musgrave, claims its only interest is in ensuring that retail planning guidelines are upheld. SuperValu claims it has no group policy on objections, while Tesco, which has lodged about 40 planning objections against its rivals in less than five years, also insists that all of its objections are all on legitimate planning grounds.
All of the supermarket groups deny utilising the planning system to achieve competitive aims. They even do so with a straight face. Yet they all must remember how problematic the practice had become towards the end of the last boom.
The then Competition Authority, chaired by Bill Prasifka, noted in 2008 that the planning system "may inadvertently facilitate the protection of incumbent retailers". It found that 76 per cent of planning appeals by competitors in the grocery sector fail.
But when it comes to hurting your competitors, the journey is more important than the destination. Prasifka found the planning process takes on average 68 weeks when a competitor appeals, as against 45 weeks when the appellant is not a competitor. That’s a lot of extra breathing space for an objecting incumbent.
The issue has now come full circle. Tesco, now a serial objector, was the biggest victim of the practice in the last boom: almost 60 per cent of its developments met the planning wrath of its competitors, the Competition Authority found.
“The identity of the planning applicants, rather than the nature of their proposed retail development, appears to be the principle driver of appeals,” the authority concluded. Prasifka called upon the Government to act to narrow the scope for competitors to object to rivals’ expansion. Here we are, 10 years on, supping the same soup.
RGData, meanwhile, this week made the reasonable point that the strong growth of Lidl and Aldi in recent years is proof that rivals’ objections are not anti competitive. The German discounters now control about a quarter of the near €10 billion grocery sector between them. If they are so stymied by objections, how are they growing so fast? The response might be another question: if they weren’t so stymied, how fast could they grow?
If the situation is to be addressed, there are two possible roads to take. One is to narrow the rules on third-party objections – Ireland is one of only a handful of European countries to permit such objections between rivals at all. The other option is for Aldi and Lidl’s rivals to change tack and stop objecting. But if what they are doing is allowed within the system, why would they change if the rules do not?
Lidl and Aldi both say they have a policy of not objecting to competitors' developments. Their rivals, as they resume expansion in a booming economy, had better hope that policy doesn't change. Wer feuer frißt, scheißt funken. He who eats fire s**** sparks.
Htamretfa opens reward drawer
When Cantor Fitzgerald bought Dolmen Securities at the outset of the recovery, much of the cash ended up warehoused in Htamretfa (yes, that is Aftermath spelled backwards), which is controlled by the old Dolmen's most senior brokers.
The directors, including Ronan Reid, who now runs Cantor Fitzgerald Ireland, recently filed a document with the Companies Registration Office which suggests they are in for a seasonal windfall.
Reid and his fellow Htamretfa directors filed a declaration as part of a €5 million restructuring which will see it pay off capital that is listed in its books as being paid up by shareholders. In essence, it will turn some of its capital into cash and divvy it out.
According to the declaration, Reid is in line to have almost €1.6 million of his shares paid off. His former colleague Gerardine Jones, who now sits on the board of the National Treasury Management Agency, is in line for a similar amount. Property developer Garrett Kelleher is listed for €1.1 million, while Paul McGowan, the broker's former managing director, will get close to €700,000.
Worldspreads founder spreads ‘war stories’ around
Creditors at Worldspreads, the Dublin-headquartered, London-listed spread betting company that collapsed after the discovery of financial irregularities in 2012 with debts of £32 million, lost everything. Or, rather, they lost 99 per cent of it: the KPMG administrators eventually returned a dividend of less than 1 per cent. Its former top executives, however, appear to have muddled through just fine.
Conor Foley, who founded Worldspreads and was chief executive when a £12 million shortfall was discovered in client accounts, has always denied any knowledge of the irregularities, for which two other executives have been sanctioned by UK authorities.
Foley is now the chairman of the Irish International Business Network, a sort of offline Facebook for global Irish business types. He hosted its annual conference this month in Dublin. It was sponsored by accountants Grant Thornton and the theme of the event was "war stories". There's certainly no shortage of those around. Just ask the former clients and investors of Worldspreads.