The Court of Justice of the European Union rules against the Catalan law on large retail establishments

Luxembourg (ACN).- “The opening of a large retail establishment” cannot be conditioned “upon economic considerations such as its impact on the existing retail trade, or the market share of the undertaking concerned”, declares the Court of Justice of the European Union. The Court’s decision applies  to the entire European Union. The “freedom of establishment” of a business, such as a large retail centre, cannot be stopped with economic arguments declares the Court; the only exceptions are due to “general interest” reasons, such as environmental protection, town planning or consumer protection. In 2005 the Catalan Government approved a law protecting small businesses in the general vicinity of large shopping centres, therefore limiting the freedom of establishment due to economic reasons. The Court’s decision overrules this law. However, in 2009 the Catalan Parliament approved a new law, which precisely corrects the parts objected by the European Court. The sentence will thus have little effect on the current legislation, but will have a great impact on business decisions and legislation across the EU.

The 2005 Catalan law stated that the Catalan Government had to authorise the establishment of a large retail centre taking into account a report on the effects it would have on the existing small shops in the area or the market share the new centre would hold. In addition, the size and the location of the centre within the urban plan could also be limited by the Government, again due to its economic impact. The principle behind the law was protecting small retail businesses from large retail companies. The European Commission protested, together with the large retail companies, and took the issue to the European Court of Justice. The Catalan Government modified the law in 2009 and thus the 2005 law was no longer valid.  

In the current law, the establishment of large retail centres is conditioned by reasons of  general interest, such as its impact on public transportation in the area and the environment, and no longer is conditioned to economic reasons. The Catalan Government stressed that the new conditions are in line with European legislation.. Therefore, today’s sentence will have little impact on the current legislation, the Centre-Right Catalan Nationalist Coalition (CiU) Government argues. The Member of the European Parliament Oriol Junqueras from the Left-Wing Catalan Independence Party (ERC), agrees.

The decision of the Court of Justice of the European Union will set jurisprudence. Therefore, some Catalan parties, such as the Catalan Socialist Party (PSC), or the aforementioned CiU and ERC, raised some concerns on how this law could affect current but in particular future legislation and business decisions that could have an effect on the traditional Catalan small business model. The Court’s decision does not recognise the need to protect small retail businesses from large shopping centres by limiting their establishment. Today’s sentence will very likely be used across Europe by large companies to defend their cases. It represents thus new challenges ahead to protect small shops from the large retail centres’ competition.