It may have seemed like a relatively trivial footnote to the EU/IMF bailout programme, but the government's undertaking to review the retail floor space cap is causing all sorts of alarm bells to ring across the retail sector.

The review, scheduled to take place in the third quarter of 2011, is to examine the economic impact of the removal of the cap, and whether it would make the retail sector more competitive and result in lower prices for consumers.

This clause is believed to have been inserted at the behest of the Competition Authority, but the real question is why either the IMF or the government have been so eager to acquiesce to its inclusion.

A 'heat map' document published in early November suggests that the IMF sees no structural or competitive problem with how the retail sector here is regulated, compared to Belgium, France or Italy, for example.

Meanwhile, the government is already conducting a review that encompasses an examination of the floor space cap, with planning minister Ciaran Cuffe expected to publish revised retail planning guidelines (RPGs) before the IMF-sanctioned review would have even begun.

So why the need for another examination? Is it that the Competition Authority views the Department of the Environment's review as a fait accompli, in as much as a green minister (Cuffe, or his successor) will more than likely keep the small guys happy by keeping Wal-Mart and Costco out?

Or is it about government bowing to pressure from large international retailers, who feel stymied by the existing planning framework and have promised jobs and tax returns in exchange for a less restrictive model?

Whichever is true, the same issue remains just as pertinent – namely whether Ireland should be so quick to change its planning framework just to suit new market entrants.

The argument is often put forward that Asda – the UK division of Wal-Mart – will not enter Ireland unless the cap is removed. This, it is said, means that 'real' price competition does not take place here, with Tesco (as market leader) able to set the 'market' price which indigenous players can then follow. This argument falls down in several areas.

If Asda were to enter the Republic, it would most likely do it through acquisition. How would replacing one retailer with another result in more competition?

Secondly, the argument that the cap acts as a barrier to entry is flawed. If the market is so over-regulated and difficult, how have the world's fourth-biggest (Tesco), fifth-biggest (Lidl) and ninth-biggest (Aldi) retailers all been able to enter in the past 13 years?

As it stands, these three retail groups alone command around 37% of the take-home grocery market – more than Superquinn and Dunnes combined, and more than their relative cumulative share in the UK. It is true that these international players have helped push down grocery prices, and it is likely that the arrival of more multinationals would do the same.

However, if Aldi, Lidl and Tesco can play by the existing rules which, though flawed, help preserve a decent mix of large and small shops, the argument for a total removal of the floor space cap seems redundant.

In essence, the crux of the issue is the difference between price and value, a distinction which government agencies such as the Competition Authority or the National Consumer Association seem unable or unwilling to understand.

A 100,000 square-foot hypermarket that serves a catchment area of three towns may offer the lowest price. On the other hand, two mid-sized supermarkets, four convenience stores, 10 butchers, 14 greengrocers, seven newsagents and two post offices offer genuine value, as they provide choice, accessibility, employment, service, an outlet for local producers and genuine competition between each other.

Certainly, the existing planning framework requires tweaking, as it was designed for a retail sector that has since evolved beyond recognition.

New developments must be assessed based on genuine need rather than on the rates they will provide, while the discounters' prejudicial treatment at the hand of local authorities also needs to be addressed.

This is far from a controversial view, as even the most protectionist of small shopkeepers would admit the current planning model is far from perfect.

However, with a near-universal recognition that the system does not need a total overhaul, why is a lone voice attempting to call the shots?

John Ruddy is editor of grocery retail magazine 'Checkout'