The Planning Appeals Commission (PAC) has said that Tesco has caused “significant loss of investment” to Ballycastle by pursuing a development plan.
The retail chain wanted to build a supermarket at Leyland Road on the edge of Ballycastle, submitting plans in 2009.
That was rejected by planners in 2011.
Tesco appealed to the PAC, which has now agreed that the development should not proceed.
The PAC ruling stated that a “Tesco cloud” had been hanging over the town while the outcome of the planning process was awaited.
It said that had caused a “significant loss of investment in the town centre”.
The Tesco scheme would have involved more than 2,000 sq m of retail space and a small amount of social housing.
The PAC accepted evidence that retail investment in the town had been discouraged until the outcome of the application was known.
It added that “significant loss of investment” would continue if planning permission was granted.
The PAC also ruled that Tesco had approached the consideration of an alternative site in the town centre in “a negative manner”.
The commission said the retailer had shown “wholly the wrong approach” in that regard and that identified difficulties with the alternative site were not insurmountable.
The plan was divisive in Ballycastle with a petition opposing it signed by over 3,000 people, while more than 1,000 people sent letters in support.
The PAC acknowledged the “wide support” for the proposal and accepted that it would have increased competition.
However, it said the economic considerations had to be balanced by the impact the proposal would have on existing businesses in the town centre.