European Commission v Kingdom of Spain.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• Date: 24 March 2011

Case C-400/08

European Commission

v

Kingdom of Spain

(Failure of a Member State to fulfil obligations – Freedom of establishment − Article 43 EC – National legislation concerning the establishment of shopping centres in Catalonia – Restrictions – Justifications – Proportionality)

Summary of the Judgment

Freedom of movement for persons – Freedom of establishment – Restrictions – Legislation restricting the siting and size of large retail establishments in particular locations

(Art. 43 EC)

A Member State fails to fulfil its obligations under Article 43 EC by adopting and/or by maintaining in force provisions which:

- prohibit the setting up of large retail establishments outside the consolidated urban areas of a limited number of municipalities;

- restrict the setting up of new hypermarkets to a limited number of districts and require such new hypermarkets not to account for more than 9% of estimated expenses for staple supplies for that district in 2009 and 7% of estimated expenses for non-staple supplies;

- require the application of ceilings as regards the market share and the impact on existing retail trade, above which it is impossible to open large retail establishments and/or medium-sized retail establishments, and

- govern the composition of the Retail Facilities Committee, consultation of which is obligatory in order to obtain a specific licence to open a large retail establishment, by ensuring that interests of existing retail trade are represented and by failing to ensure that associations active in the field of environmental protection, or interest groups working towards consumer protection, are represented, since those provisions, taken as a whole, have the effect of hindering or of rendering less attractive the exercise by economic operators from other Member States of their activities on the territory concerned through a permanent establishment and thus of affecting their establishment in the national market and accordingly constitute a restriction on the freedom of establishment within the meaning of Article 43 EC.

Such restrictions are not justified by matters of environmental protection, town and country planning or consumer protection.

The obligation to take account, for the purposes of granting such a licence, of the existence of retail facilities in the area concerned and the impact of a new establishment on the commercial structure of that area concerns the impact on existing traders and the market structure, not consumer protection. The same is true of the obligation in the context of the procedure for the grant of that licence, to obtain a market share report which is to be binding if unfavourable and which must be unfavourable if the market share exceeds a certain value. In that regard, since those provisions require the application of ceilings as regards the market share and the impact on existing retail trade, above which it is impossible to open large retail establishments and/or medium-sized retail establishments, such considerations cannot, being purely economic, constitute an overriding reason in the public interest.

Furthermore, as the only sectoral interest represented in the Retail Facilities Committee is that of the existing local trade, a body composed in that manner, with no representation of environmental or consumer interests, but with representation of potential competitors of the applicant for a licence, cannot constitute an appropriate instrument for pursuing objectives relating to town and country planning, environmental protection or consumer protection.

(see paras 70, 72, 85, 95-98, 111, operative part 1)

JUDGMENT OF THE COURT (Second Chamber)

24 March 2011 (*)

(Failure of a Member State to fulfil obligations – Freedom of establishment − Article 43 EC – National legislation concerning the establishment of shopping centres in Catalonia – Restrictions – Justifications – Proportionality)

In Case C‑400/08,

ACTION under Article 226 EC for failure to fulfil obligations, brought on 16 September 2008,

European Commission, represented by E. Traversa and R. Vidal Puig, acting as Agents, and by C. Fernández Vicién and A. Pereda Miquel, abogados, with an address for service in Luxembourg,

applicant,

v

Kingdom of Spain, represented by N. Díaz Abad, acting as Agent, with an address for service in Luxembourg,

defendant,

supported by:

Kingdom of Denmark, represented by J. Bering Liisberg and R. Holdgaard, acting as Agents,

intervener,

THE COURT (Second Chamber),

composed of J.N. Cunha Rodrigues, President of the Chamber, A. Arabadjiev, A. Rosas (Rapporteur), U. Lõhmus and P. Lindh, Judges,

Advocate General: E. Sharpston,

Registrar: N. Nanchev, Administrator,

having regard to the written procedure and further to the hearing on 6 May 2010,

after hearing the Opinion of the Advocate General at the sitting on 7 October 2010,

gives the following

Judgment

1 By its application, the Commission of the European Communities claims that the Court should declare that the Kingdom of Spain has failed to fulfil its obligations under Article 43 EC, by imposing restrictions on the establishment of shopping centres in Catalonia, deriving from Law 7/1996 on retail commerce (Ley 7/1996, de ordenación del comercio minorista) of 15 January 1996 (BOE No 15, 17 January 1996, p. 1243; ‘Law 7/1996’) and the legislation of the Autonomous Community of Catalonia on the same subject, that is to say, Law 18/2005 on trading establishments (Ley 18/2005 de equipamientos comerciales) of 27 December 2005 (DOGC No 4543, 3 January 2006, p. 72; ‘Law 18/2005’), Decree 378/2006, implementing Law 18/2005 (Decreto 378/2006 por el que se desarolla la Ley 18/2005), of 10 October 2006 (DOGC No 4740, 16 October 2006, p. 42591; ‘Decree 378/2006’), and Decree 379/2006 approving the new sectoral territorial plan for trading establishments (Decreto 379/2006 por el que se aprueba el Plan territorial sectorial de equipamientos comerciales) of 10 October 2006 (DOGC No 4740, 16 October 2006, p. 42600; ‘Decree 379/2006’).

I – National legal context

A – Law 7/1996

2 Article 2 of Law 7/1996 provides:

‘Retail establishments

1. Retail establishments are permanent premises or facilities intended for regular retail activities, whether on a continuous basis or on specific days or for specific periods.

2. Included in the definition in paragraph 1 are kiosks and, generally, installations of all types intended for the use specified in that definition, provided that they are buildings for the purposes of Article 334 of the Civil Code.

3. The Autonomous Communities shall lay down conditions for granting the status of large retail establishment. In any event, for the purposes of licences and the provisions of the commercial legislation, retail establishments intended for retail activities for all types of goods with a public display and sales area exceeding 2 500m² shall be regarded as large retail establishments.’

3 Article 6 of that Law provides:

‘Opening of large establishments

1. The opening of a large retail establishment shall be conditional upon the holding of a specific commercial licence, issued by the relevant Autonomous Community, which may also require an administrative licence in other cases linked to retail activity.

2. For the purposes of deciding upon the grant or refusal of the licence referred to in paragraph 1, account shall be taken of the adequacy of existing retail facilities in the local area concerned and the impact which the new establishment might have on the commercial structure of that area.

In any event, a report by the Tribunal de Defensa de la Competencia [(Competition Court)] shall be required, although its findings shall not be binding.

3. An area shall be regarded as having adequate facilities if the existing population or, if appropriate, the medium-term forecast population enjoys a level of supply which, in terms of quality, variety, service, price and opening hours, meets both the requirements of the current situation and developing trends in modern retail trade.

4. The impact on the existing commercial structure shall be assessed, account being taken of the improvement which the opening of a large establishment represents in terms of free competition in the area and of the negative effects possibly entailed for existing small traders.

5. The competent Autonomous Communities may set up local Retail Facilities Committees to report on the opening of large establishments, in accordance with any rules which those Communities may lay down.’

4 The final provision of Law 7/1996 specifies the constitutional status of the various provisions of that Law. It specifies that paragraphs 1 and 2 of Article 6 were enacted pursuant to the State’s exclusive competence under Article 149(1)(13) of the Constitution. Paragraphs 3, 4 and 5 of Article 6 fall within the residual category of provisions which ‘may be applicable in the absence of specific legislation enacted by the Autonomous Communities’.

B – Law 18/2005

5 Paragraphs 1 and 2 of Article 3 of Law 18/2005 define, for the Autonomous Community of Catalonia, ‘large’ and ‘medium-sized’ retail establishments by reference to the population of the municipality in which they are situated. As the Advocate General states in point 11 of her Opinion, the definitions may be summarised in the following table:

Population of municipality	Large establishments (sales area of X m² or more)	Medium-sized establishments (sales area of X m² or more)
Over 240 000	2 500 m2	1 000 m2
25 001 to 240 000	2 000 m2	800 m2
10 001 to 25 000	1 300 m2	600 m2
Up to 10 000	800 m2	500 m2

6 Article 3(3) of that Law specifies that the sales area limitations under the local sectoral retail facilities plan (‘PTSEC’) are to apply to medium-sized food sector establishments and to...