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<Commission Action on Barriers to Retail Establishment

BACKGROUND

The European Union has done a lot to dismantle barriers to retail establishment. The Treaty enshrines freedom of establishment, while the Services Directive and the Court of Justice of the European Union (hereafter, 'the Court' or 'CJEU') flesh the Treaty out with specific prohibitions of:

  • economic tests that make the granting of authorisation subject to proof of the existence of an economic need or market demand;
  • involvement of competing operators in the granting of authorisations;

Also, although retail establishment authorisation schemes are not prohibited per se, they are subjected to three conditions:

  • non-discrimination according to nationality;
  • necessity: requirements must be justified by an 'overriding reason relating to the public interest';
  • proportionality: the requirements must not go beyond what is necessary to attain the objective and it must not be possible to replace those requirements with other, less restrictive measures which attain the same result.

Still, member states, regions and municipalities retain great freedom to control retail development because their actions are generally linked to urban planning founded on environmental, consumer protection or other concerns recognised by the Court as 'overriding reasons relating to the public interest'.

It is within this general context and these constraints that the European Commission is currently considering what it can do to combat what it sees as the poor performance of the European retail sector (flat productivity growth compared to 3.9% in the U.S., partly explained by too much regulation).

CONSULTANTS’ RECOMMENDATIONS TO THE COMMISSION

In a Legal study on Retail Establishment through the 28 Member States done for the Commission, the consultants have found bans on certain types of retail outlets or on outlets exceeding a certain size which they think might be discriminatory or not justified by an overriding reason of public interest, and they have found other restrictions that might fail the proportionality test because of their complexity, length, cost, lack of transparency or arbitrariness.

They have made six interlinked recommendations to the Commission:

  1. The Commission could adopt a list of universally good practices in retail establishment authorisation and recommend these practices to the member states.
  1. It could prepare a check-list and an analysis tree for the national, regional and local authorities enabling them to check, step by step, whether or not their regulations comply with EU establishment law.
  1. The Commission could ask the member states to perform a compliance self-assessment of their regulations using these tools. The assessment would ensure that the regulations:
  • don't create prohibited requirements or requirements that fail the non-discrimination / necessity / proportionality tests;
  • implement the good practices.
  1. The Commission could urge the member states to report to it on their self-assessment.
  1. It could draft a Model Retail Establishment Act, incorporating the EU establishment rules, which the member states would have the option of adopting.
  1. If no self-assessment is conducted, or if the self-assessment shows serious non-compliance with EU law and the member state does not act to amend, the Commission could take the matter to the Court (in fact, the Commission can't litigate against a member state for not conducting a voluntary self-assessment or for not complying with the results of the self-assessment; it could, however, conduct more systematic and in-depth reviews of the regulations of the member states that don't self-assess).

For EPF's options in the follow-up to the Recommendations, see epf17-71 of 01.08.2017