Commission Consults on Barriers to Retail Establishment

The European Commission was consulting on how to make it easier for retailers to do business within the EU, particularly given the growth of e-commerce and the accelerate multi-channel retail environment. The consultation was originally announced in the April 2017 Roadmap on Best Practices on retail regulation. The Roadmap proposes the adoption of a set of (non-legislative) best practices which member states can use when assessing and modernising national rules on setting up and operating retail outlets.

The Commission is concerned about a lack of growth in the European retail sector, in particular when compared with the US, where less restrictive entry conditions apply.

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 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.

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.
  2. 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.
  3. 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.
  2. It could draft a Model Retail Establishment Act, incorporating the EU establishment rules, which the member states would have the option of adopting.
  3. 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).

In recent years the issue of better regulation and, in particular, the issue regarding the impact of existing regulations on retailers has gained increasing attention internationally, at EU level and in the Member States.  The European Commission Consultation provides the EU with an opportunity to develop a road map for the future and agree a set of ambitious proposals that will support efforts to stimulate growth.

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