Freedom of establishment
Court moves against Spain for restricting retail establishments
By Sophie Mosca | Thursday 24 March 2011
Hypermarkets have won a victory at the EU Court of Justice, following a March 24 judgement condemning member states which make the opening of large retail establishments subject to economic considerations, such as their impact on the existing retail trade, and limit the size of their buildings and sites.
The action was brought against Spain by the European Commission, and the court’s judgement
(1) found in favour of the Commission.
The Commission started proceedings against Spain in 2008 on the basis of complaints about restrictions on large retail establishments imposed by the law of the autonomous territory of Catalonia. According to the Commission, these restrictions contravene freedom of establishment, an overriding principle of EU law.
Spanish law subjects the building of hypermarkets in this region to a system of prior authorisation, which restricts the building of large retail establishments outside urban centres. These establishments are only licensed after an assessment of their impact on the existing retail trade in the area.
While the court said that restrictions on large retail establishments can be justified by objectives of town planning or protecting the environment, as cited in Spanish law, the Spanish rules are aimed more at protecting existing commerce than the environment or consumers, the court said.
Moreover, they are likely to discourage economic operators from other member states from setting up businesses in Catalonia, and to restrict their access to the Spanish market. In this way, Spanish law was found to restrict freedom of establishment and therefore to be contrary to EU law.(1) Case C-400/08