COMMISSION STAFF WORKING DOCUMENT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A European retail sector fit for the 21st century
Date: 2018-04-19
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: administrative formalities, competitiveness, electronic commerce, establishment, retail selling, retail trade, single market, small and medium-sized enterprises, supply, trade regulations

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 19.4.2018 SWD(2018) 236 final  COMMISSION STAFF WORKING DOCUMENT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A European retail sector fit for the 21st century {COM(2018) 219 final} - {SWD(2018) 237 final}  
 
 
Contents 
1. 

Introduction .................................................................................................................................... 3 

2. 

Importance and characteristics of the retail sector in the EU ........................................................ 4 

2.1. 

Economic importance of retail ................................................................................................ 4 

2.2. 

Digitalisation of the sector .................................................................................................... 10 

2.2.1. 

E-commerce .................................................................................................................. 10 

2.2.2. 

Digitisation of stores and the supply chain ................................................................... 13 

3.  How restrictive is the retail sector – Retail Restrictiveness Indicator (RRI) .................................. 14 

4.  Restrictions to the establishment of retail shops ......................................................................... 16 

4.1. 

Introduction .......................................................................................................................... 16 

4.2. 

Conditions for establishment ................................................................................................ 19 

4.2.1. 

Conditions relating to size (thresholds) ........................................................................ 19 

4.2.2. 

Level of detail in spatial plans ....................................................................................... 21 

4.2.3. 

Location-specific rules ................................................................................................... 22 

4.2.4. 

Use of economic data ................................................................................................... 25 

4.3. 

Procedures for establishment ............................................................................................... 27 

4.3.1. 

Permits required in the establishment procedure ....................................................... 28 

4.3.2. 

Entities involved in the establishment procedure ........................................................ 30 

4.3.3. 

Impact assessments required in the establishment procedure ................................... 32 

4.3.4. 

Length of the establishment procedure ....................................................................... 34 

4.3.5. 

Transparency of the procedure for establishment in Member States ......................... 35 

4.4. 

Retail Restrictiveness Indicator: results for establishment restrictions ............................... 37 

4.5. 

Potential impacts of restrictions to retail establishment ..................................................... 38 

4.5.1. 

Potential impacts on competition ................................................................................. 39 

4.5.2. 

Potential impacts on market structure ......................................................................... 42 

4.5.3. 

Potential impact on productivity .................................................................................. 44 

4.5.4. 

Potential impact on employment ................................................................................. 45 

4.5.5. 

Potential impact on innovation .................................................................................... 46 

4.5.6. 

Potential impact on consumers .................................................................................... 47 

5.  Operational restrictions ................................................................................................................ 49 

1 

 
 
 
 
 
5.1. 

Introduction .......................................................................................................................... 49 

5.2. 

Shop opening hours .............................................................................................................. 49 

5.3. 

Product-specific sales restrictions ........................................................................................ 57 

5.4. 

Sales promotions and discounts ........................................................................................... 66 

5.5. 

Retail-specific taxes and fees ................................................................................................ 80 

5.6. 

Sourcing................................................................................................................................. 88 

5.6.1. Regulatory sourcing restrictions ......................................................................................... 89 

5.6.2. Territorial supply constraints (TSCs) ................................................................................... 91 

5.7. 

Contractual practices of modern retail ................................................................................. 96 

5.8. 

Retail Restrictiveness Indicator - results for operational restrictions ................................ 100 

6.  Cost of compliance with regulatory requirements ..................................................................... 101 

7.  Conclusions ................................................................................................................................. 105 

8.  Annex 1: Methodology of assessment of restrictions to retail establishment and operations and 
values of the Retail Restrictiveness Indicator ..................................................................................... 107 

9.  Annex 2: Results of the regression analysis ................................................................................ 123 

2 

 
 
 
 
 
1.  Introduction 

The Single Market Strategy adopted in October 2015 announced that the Commission  "will set out 
best practices for facilitating retail establishment and reducing operational restrictions in the Single 
Market.  These  will  provide  guidance  for  Member  States  to  reforms  and  priority-setting  for 
enforcement policy in the retail sector".  

Retail  and  wholesale  activities  are  one  of  the  largest  services  sector  in  the  European  Union.    The 
functioning of the retail market affects the whole economy, because of its size and also because of 
its linkages with other sectors of the economy. It is also important for consumers who spend 30% of 
their budgets in shops. Retail brings the Single Market to the EU consumers with a wider choice of 
products available to consumers.  

The digital revolution is dramatically changing the features of retail. This provides opportunities for 
retailers  and  consumers  but  it  is  also  a  challenge  in  particular  for  traditional  retailers,  often  SMEs 
which are important players on the retail market. Tomorrow retailing will not be the same as today 
and multi-channel retail, combining both on-line and off-line, will remain the trend for retail in the 
coming years.. 

The  assessment  of  the  performance  of  the  EU  retail  sector  shows  that  there  is  room  for 
improvement. A better functioning retail Single Market would allow for a more efficient and more 
innovative retail sector as well as for more competitive consumers prices. 

The  retail  sector  is  highly  regulated  in  most  Member  States.  This  is  due  to  the  Member  States' 
willingness  to  achieve  public  policy  objectives  such  as  the  protection  of  consumers,  workers, 
environment  and  town  and  country  planning.  Often,  retail  is  subject  to  regulations  at  national, 
regional  and  local  level.  In  the  light  of  the  challenges  faced  by  the  retail  sector,  competent 
authorities need to assess whether their regulatory frameworks are proportionate and effective for 
the public policy objectives and do not unduly restrict retail development. There is also a need for 
Member States to check whether national regulations are well-targeted, evidence-based and clearly 
drafted. Less complex regulations, better awareness of the sector's specificities and policy support 
would help the retail sector to be flexible and innovative.1 

The Commission carried out an open public consultation from 17 July to 8 October 2017 to gather 
the views of retailers, competent authorities, trade unions and citizens and others. Workshops were 
also  held  as  well  as  studies  carried  out.    Member  States  were  consulted  through  meetings  of  the 
Services  Directive  Expert  Group.  A  report  documents  the  consultation  activities  carried  out  in 
preparation of the retail action.2   

Responses  acknowledge  the  fact  that  the  retail  sector  is  undergoing  a  massive  change  due  to  e-
commerce. They also converge to indicate that the trend towards multi-channel retail combining on-
line and off-line will continue.  

1  European  Commission,  High  Level  Group  on  Retail  Competitiveness  (2015),  Report  of  the  preparatory 
working group on innovation; https://ec.europa.eu/growth/single-market/services/retail_en. 
2  Commission  Staff  Working  Document  "Public  Consultation  on  Retail  regulations  in  a  multi-channel   
environment – Synopsis Report", SWD(2018) 237. 

3 

 
 
 
                                                            
This consultation confirmed that national retail regulatory frameworks are not fit for a multi-channel 
environment  where  retailers  have  to  develop  a  coherent  strategy  for  on-line  and  off-line  sales.  It 
also  showed  the  need  to  recall  that  all  restrictions  should  be  justified  and  proportionate  to  the 
public policy objectives pursued.  

The  purpose  of  this  document  is  to  provide  the  background  and  evidence  that  underpins  the 
Communication  on  a  European  retail  sector  fit  for  the  21st  century  (hereinafter  referred  as  'the 
Communication').  It  presents  detailed  information  on  particular  types  of  restrictions  affecting  the 
retail sector in Europe, their characteristics, justification, scope and scale, as well as their impact on 
the actual functioning of the sector. Those details form the basis for the best practices put forward 
in  the  Communication.  They  show  various  approaches  adopted  in  particular  Member  States,  and 
help to point to good practices.  

2.  Importance and characteristics of the retail sector in the EU 

2.1.  Economic importance of retail  

Retail  is  the  biggest  sector  in  the  EU  non-financial  business  economy  in  terms  of  number  of 
enterprises  and  persons  employed.  It  alone  represents  4,5%  of  value  added  (gross  value  added, 
2015)  and  8,6%  of  employment.3  Its  importance  is  even  more  visible  when  combined  with  the 
wholesale  sector.  The  two  together  produce  10%  of  EU  value  added  and  employ  13%  of  the  total 
workforce. Retail is also very important for youth employment (around 13% of retail employees are 
in the 15-24 age range). For many, this is the first job - from all young people employed, 21% worked 
in retail and wholesale, compared to 14% of people between 25 and 49 years old and 12% for people 
between 50 and 64 years old.4 Work in retail can often be combined with other activities, such as 
studies or household care. This is particularly important for women, who work part-time more often 
than men (75% of all part-time workers are females), and they account for 63% of those employed in 
retail companies.  

Nearly 5,5 million (23% of all non-financial business economy) companies are active in the EU retail 
and  wholesale  sectors  (3,6  million  in  retail  and  1,8  million  in  wholesale,  2015).  Most  of  them  are 
SMEs, which also generate 66% of the sectors' value added and 70% of employment. For all SMEs 
active in the non-financial sector, 22% of value added comes from retail and wholesale enterprises 
(compared to 20% by manufacturing and 11% by construction firms, 2015).5 Running a shop seems 
to  be the  most common  type of  a  family  business  –  the number  of  SMEs  per  100  inhabitants  was 
largest in distributive trades and accounted for 1,2 company on average in the EU.  

Retail is also closely linked with other sectors of the economy. Its links with the wholesale sector are 
obviously  strong,  as  are  its  impacts  on  the  performance  of  manufacturers  of  certain  products 
(designed  for  final  consumption),  farmers,  as  well  as  providers  of  relevant  services,  including 
transportation  and  logistics,  and  other  business  services.  The  importance  of  those  linkages  can  be 

3 Eurostat data, 2015. 
4 Eurostat, Labour Force Survey 2016. 
5 2016 SMEs performance review; https://ec.europa.eu/growth/smes/business-friendly-
environment/performance-review-2016_en.  

4 

 
 
 
                                                            
well illustrated by the fact that one of the toughest negotiations happen along the supply chains for 
different products, when suppliers meet with retailers, and the relations between those parties are 
often  very  dynamic.  Those  linkages  with  other  sectors  are  however  not  easy  to  measure.  For 
example, the value of goods and services purchased for resale in the same condition for the retail 
sector accounted for 1, 98 trillion EUR (in 2015, EU28)6, which was 69% of the sector's turnover (2,88 
trillion  EUR).7  Another  approach  looks  at  the  value  added  being  traded  between  sectors  and 
between countries, and the importance of regulations embodied in one sector for another sector's 
outcomes.  An  analysis  carried  out  from  this  perspective  by  the  Commission8  concluded  that 
regulatory restrictions in retail account for as much as 32% of all services market related restrictions 
that are carried over to other sectors. Reducing restrictions in retail would also have positive spill-
over effects in other sectors of the economy, in particular upstream in manufacturing. More efficient 
retail sector and lower consumer prices create more demand and steer it towards more innovative 
products. More competitive retail can also increase its demand for information technology products 
and services. 

There  are  different  types  of  retailers  on  the  market.  Grocery  retailers  provide  the  largest  part  of 
retail turnover, from 40% in Austria to 60% in Romania. Among non-grocery specialists, apparel and 
footwear generate from 4% (Estonia and Finland) to 10% (Italy) of retail sales. Similar relative cross-
country differences can be noted for other brick-and-mortar specialist retailers, such as for example 
health and beauty, home and garden or electronic appliances traders.9 Those variations often reflect 
the particularities of market structures – in some countries specialist retailers are still more common 
whereas in other, clothes, cosmetics or electronics are bought more often in larger grocery outlets 
or, in particular in the last years, on the Internet. 

Finally,  retail  plays  a  substantial  role  for  consumers.  Expenditure  on  goods  that  are  normally 
purchased from retailers accounts for ca. 30% of household budgets (out of which 16% on food and 
non-alcoholic  beverages,  5%  on  clothing  and  footwear,  over  2%  on  furniture  and  household 
appliances).10  The  average  amount  spent  yearly  by  a  household  on  goods  distributed  by  retailers 
ranges  from  over  €  18 000  (Ireland)  to  €  3 500  (Bulgaria).  This  expenditure  decreased  in  some 
countries  (Greece  and  Italy,  where  between  2012  and  2016  it  fell  by  2%  yearly)  and  increased  in 
other  (Romania  +8%,  Estonia  and  Lithuania  +6%  of  yearly  growth  in  the  same  period).11  The  last 
three countries also recorded the most dynamic growth of sales in absolute value terms as well as 
per capita.  

The amounts spent, both per household as well as per person (figure 1) depend to a great extent on 
the  level  of  prices,  size  of  the  household  and  the  disposable  income,  and  it  is  correlated  with  the 
GDP  per  capita.  As  the  recent  Consumer  Markets  Scoreboard  reports,  price  levels  in  general  are 
strongly  positively  correlated  with  income  per  capita,  however  price  levels  for  goods  are  less 

6  The  value  of  purchases  of  goods  and  services  for  the  retail  sector  accounts  for  2,38  trillion  EUR  (2015; 
Eurostat). 
7 Eurostat SBS data http://ec.europa.eu/eurostat/web/structural-business-statistics/data/database.  
8 European Commission DG Internal Market, Industry, Entrepreneurship and SMEs, Background documents for 
the European Semester (2018) The EU retail sector.  
9 Euromonitor data, 2016. 
10 Ibid. 
11 Ibid. 

5 

 
 
                                                            
dispersed in the EU than for services, and they also converge more with time.12 This might indicate 
that, in relative terms, consumers in less affluent countries spend more on basic goods (such goods 
compose a larger share of their household budgets).13 In any terms, retailers are definitely present in 
the  day-to-day  lives  of  millions  of  Europeans,  and  the  accessibility  of  shops,  their  offer  and  the 
extent to which it responds to consumer needs have a real impact on the quality of those lives. 

Figure 1: Value of retail per capita and its correlation with the GDP per capita 

Retailing, EUR per capita, 2016 

Sweden

Denmark

United Kingdom

Finland

Germany

Italy

Portugal

Greece

Croatia

Slovakia

Hungary

Poland

Bulgaria

0

2.000

4.000

6.000

8.000

Source: Euromonitor and Eurostat data 

The performance of retail companies matters not only for those companies themselves but also for 
the  whole  economy  and  for  consumers.  Establishing  good  regulatory  and  other  conditions  helps 
retailers to remain competitive and grow, which is a key objective for most of them. Currently, the 
sector does not belong to the most productive ones. Firstly, the wage-adjusted labour productivity in 
retail at 125 (for EU28 in 2015) was lower than in wholesale (153), transportation and storage (147) 
and  in  manufacturing  (153).  It  was  however  at  similar  level  as  for  professional/scientific  and 
technical  activities  (121)  and  construction  (125).  Secondly,  the  average  productivity  level  of 
European retail was lower than in the US (although the difference seems to be almost negligible and 

12Consumer Markets Scoreboard 2016; 
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/12_edition/docs/consumer_mar
kets_scoreboard_2016_en.pdf. 
13 Although price dispersion for non-durable goods (e.g. food) is still higher than for semi-durable ones. 

6 

 
 
 
                                                            
might stem from differences in measurement and in economic structures)14. And thirdly, it has been 
rather  stable  in the last years,  compared  to  the  US,  where  it  grew  significantly15  or  Canada, Japan 
and Australia, where it also increased however less dynamically16. In addition, in majority of Member 
States, the allocative efficiency in retail has been negative in the last years17, i.e. productive factors 
have not been allocated towards their most efficient use. 

Compared to other services sectors, retail shows relatively low profitability (figure 2) and a high rate 
of companies' births and deaths (figure 3), mostly due to the constant need of retail businesses to 
adapt to market conditions in order to remain competitive and survive. However, both profitability 
and market dynamism vary significantly among Member States, indicating that there is a margin of 
improvement of less well performing countries. 

Figures 2 and 3: Gross operating rate and churn rate in retail 

Source: Eurostat, 2014.  

14 T. Harchaoui, The Europe-U.S. Retail Trade Productivity Gap in a Rear-view Mirror, University of Groningen,  
2012; http://www.rug.nl/research/portal/en/publications/the-europeus-retail-trade-productivity-gap-in-a-
rearview-mirror(7bd88d44-13c9-4402-9dba-94d471e1bf2e).html. 
15 Data on EU from Eurostat, data on the US from the Bureau of Labor Statistics, according to which the retail 
productivity in the US grew by 15% between 2007 and 2015; https://www.bls.gov/lpc/tables.htm. 
16 Data provided by the Japan Productivity Centre; http://www.jpc-net.jp/eng/stats. 
Data  for  Australia  taken  from  the  Australian  Government  Productivity  Commission  report,  2016; 
https://www.pc.gov.au/research/ongoing/productivity-update/2016/productivity-update-2016.pdf. 
Data for Canada taken from the Statistics Canada; https://www.statcan.gc.ca/eng/nea/list/prod.    
17 Eurostat data for 2008-2014; allocative efficiency captures the extent to which more productive firms have 
higher market shares   

7 

 
 
 
                                                            
Source: Eurostat, 2014.  

Innovation  in  the  retail  sector,  one  of  the  key  elements  of  competitiveness,  is  difficult  to  capture. 
This is because retailers and wholesalers place emphasis on less tangible forms of innovation, such 
as  new  business  models  or  processes.  A  key  driver  of  innovation  is  the  ongoing  trend  towards 
digitisation. The retail sector appears to be investing more heavily than all sectors on average in ICT 
management tools such as electronic supply chains management (24,2% of retail companies against 
16.8%  for  the  EU  average  for  all  sectors)  but  remains  behind  on  advanced  ICT  tools  such  as  cloud 
computing services.18 More detailed information on the digitisation trend is presented in section2.2. 
According  to  another  survey,  74%  of  retail  companies  introduced  at  least  one  innovation,  mostly 
new or better goods and services, and new or better marketing strategies. However, compared to 
other  service  providers  and  other  sectors  in  general,  a  smaller  proportion  of  retailers  said  they 
invested in any innovation activities (68% compared to 76%). Those that plan such investment in the 
future would focus on marketing strategies, goods and services, and the main reason for this would 
be increased competition. A major problem for the commercialisation of retailer's innovative goods 
or services was the domination of market by established competitors.19 

Improving  performance,  productivity  and  competitiveness  is  a  constant  challenge  for  retail 
companies.  Scaling  up  seems  to  be  the  answer.  It  allows  retailers  to  be  more  efficient,  remain 
profitable and develop. The starting point for their development is the domestic market, however it 
is the cross-border expansion that is the condition to actually build scale. 

Due  to  its  cross-border  dimension,  the  sector  is  also  important  for  the  Single  Market  integration. 
Brick-and-mortar retail is characterised by a dynamic cross-border expansion of large and medium-
sized companies establishing in other Member States. All ten biggest retail companies in the EU are 
multinational  and  some  of  them  have  shops  in  the  majority  if  not  all  of  the  28  Member  States. 
Physical premises with foreign-owned banners are established in each Member State however their 

18 Digital Agenda Scoreboard, European Commission 2015; https://ec.europa.eu/digital-single-
market/en/digital-scoreboard. 
19 2015 Innobarometer; http://ec.europa.eu/growth/industry/innovation/facts-figures/innobarometer_en.  

8 

 
 
 
                                                            
share in turnover varies from 8 % in Germany to nearly 50% in Latvia (in 2012, figure 4).20 These are 
usually large European  companies  - their share in the number of retail companies is much smaller 
than the shares in turnover or in value added and the number of persons employed. Foreign retail 
companies seem to also pay higher salaries than the domestic ones (their share in personnel cost is 
higher than the share in the number of persons employed), which may indicate that they hire more 
skilled workforce. 

Figure 4: Turnover generated by domestic and foreign-controlled enterprises in the store-based retail 
market 

Turnover generated by domestic and  
foreign-controlled enterprises in the store-based retail market 

100%

80%

60%

40%

20%

0%

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Source: study carried out for the European Commission by the EMLE (University of Rotterdam); 2018; calculations based on 
FATS. No data for Belgium, Cyprus, Estonia, Greece, Luxembourg and Malta. 

European retailers are also present globally and four of them (from Germany, France and the UK) are 
ranked  among  the  ten  biggest  world  retail  companies.21  This  picture  is  changing  with  the 
development  of  multichannel  sales  –  a  non-European  Internet  retailer  joined  the  world  top  10 
recently, replacing a European brick-and-mortar company. 

As  retailers  are  expanding  to  foreign  markets,  the  regulatory  environment  that  they  have  to  deal 
with,  its  complexity  and  cross-border  differences,  are  crucial  to  the  success  of  such  cross-border 
investments and operations, in particular for smaller companies. Regulations impact the company's 
performance and its position in the national market in the first place, and only when the company 
reaches a certain potential and a stable position there, it can enter a foreign market, provided it can 
overcome the barriers and fulfil the requirements it faces abroad. 

20 J. Kantorowicz, T. Hlobil, M. Buiten, University of Rotterdam, Store-based retail market openness: measuring 
cross-border operations and investment; analysis carried out for the European Commission.  
21 According to the 2016 ranking of Deloitte; 
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/consumer-industrial-products/gx-cip-
2017-global-powers-of-retailing.pdf.  

9 

 
 
 
                                                            
 
 
The development of e-commerce has made it possible to reach out to foreign customers without the 
need to invest in physical premises. 

2.2.  Digitalisation of the sector  

2.2.1.  E-commerce 

Growth of on-line sales 

The growth of e-commerce is one of the key trends affecting the retail sector. The value of on-line 
sales practically doubled between 2012 and 2017 from €121 bn to €224 bn (figure 5). Mobile sales 
are quickly becoming an essential part of the e-commerce market: sales through mobile phones, or 
"m-commerce",  accounted  for  29%  of  on-line  purchases  of  goods  in  2017,  up  from  only  8.5%  in 
2012.22 Products most commonly sold on-line include clothes and sports goods (purchased by 64% of 
e-buyers in the last 12 months in 201723), household goods (46%), books, magazines and e-learning 
material  (36%)  and  electronic  equipment  (25%).  However  despite  this  strong  growth,  the  share  of 
goods sold on-line is still only a small part of the retail market. In 2016, on-line sales only accounted 
for 8% of retail sales, growing from 2% in 2006. 

Figure 5: Value of EU retail sales by sales channels 

Value of EU retail sales by sales channel  
(in € mil) 

Internet sales

Store-based sales

2.500.000,0

2.000.000,0

1.500.000,0

1.000.000,0

500.000,0

0,0

2011 2012 2013 2014 2015 2016 2017

Source: Euromonitor Passport database 

Use of on-line sales channel by retailers 

22 Euromonitor data, 2017. 
23 Eurostat isoc_ec_ibuy. 

10 

 
 
 
 
 
  
                                                            
While  most  EU  retailers  (63%)  now  have  their  own  website,  the  share  is  still  lower  than  most  EU 
companies (77%). 22% of retailers sold on-line in 2016, a share which has been steadily increasing 
from  13%  in  2011.  But  this  does  not  mean  that  EU  retail  companies  are  not  present  on-line. 
European  retailers  are  more  likely  than  other  EU  companies  to  use  social  media  (51%  of  retailers 
against 47% of EU companies), and slightly more likely to pay to advertise on the internet (26% of 
retailers against 25% EU average). SMEs are also likely to use on-line platforms as their first means of 
accessing  on-line  markets.  According  to  a  recent  Eurobarometer  survey24,  more  than  four  in  ten 
companies use on-line marketplaces to sell their products and services (42%). 

E-commerce also offers SMEs the possibility to expand their activities across borders. In 2015, 19% 
of companies in the retail sector sold on-line, against 17% for the EU economy as a whole. This share 
has  been  steadily  increasing  since  2010,  when  it  stood  at  11,7%.25  Over  40%  of  European  on-line 
buyers  purchase  products  from  abroad  at  least  once  a  year26  and  nearly  2  out  of  3  have  bought 
cross-border  at  least  once  in  their  life.  And  the  potential  of  e-commerce  is  significant  –  between 
2012 and 2017, the turnover it generated in the EU grew on average by 11.5% yearly27 in absolute 
terms, and the e-commerce share in total retail turnover also grew by 1-2 percentage points yearly 
on average. However the share of e-commerce in total retail varies greatly between Member States: 
it accounts for 1.7% of sales in Croatia and almost 16% in Denmark.28 

Cross-border sales 

On-line sales are a powerful enabler for cross-border integration. E-commerce increases the choice 
offered to consumers by giving them access to traders that do not have a physical presence in their 
own country. Of the consumers that bought on-line in the last twelve months in 2017, 42% bought 
from  sellers  in  another  country.  The  willingness  of  consumers  to  buy  on-line  from  traders  located 
abroad  appears  to  be  even  higher:  according  to  a  recent  study29,  31%  of  consumers  who  never 
bought  on-line  from  sellers  located  in  other  countries  are  ready  to  do  so  in  the  future.  This 
proportion rises to 61% in Poland. 

However EU retailers appear to only be slowly grasping the opportunities offered by internet sales. 
In 2017, only 10% of retailers sold on-line to customers in other countries – only slightly more than 
the economy-wide average of 9%. As a result, EU retailers also make less money from on-line sales 
than  other  types  of  companies.  E-commerce  only  represented  10%  of  retailers'  turnover  in  2017, 
against 18% for the rest of the economy.30  

Barriers to operating on-line  

Overall,  a  significant  share  of  on-line  sales  is  carried  out  by  retailers  operating  brick-and-mortar 
shops.  44%  of  on-line  sales  are  carried  out  by  physical  retailers  operating  outside  of  on-line 
platforms,31  and  further  shares  of  sales  are  made  by  traditional  retailers  selling  through  on-line 

24 Flash Eurobarometer 439: The use of on-line marketplaces and search engines by SMEs. 
25 Digital Agenda Scoreboard, European Commission 2015. 
26 Eurostat, Digital Economy and Society Index, isoc_ec_ibuy. 
27 Euromonitor data, 2017. 
28 Ibid. 
29 DPD Group E-shopper Barometer Report, 2017. 
30 Eurostat, Digital Economy and Society Index, isoc_ec_ibuy. 
31 Euromonitor data, 2017. 

11 

 
 
                                                            
marketplaces.  The  main  barriers  to  selling  on-line  are  related  to  high  delivery  costs,  expensive 
guarantees  and  returns,  lack  of  awareness  of  rules  to  follow,  insufficient  speed  of  the  Internet 
connection,  and  other  issues.32  Nonetheless,  for  these  companies  established  first  as  physical 
entities,  barriers  related  to  establishment  and  day-to-day  operations  will  remain  important 
determinants of growth and efficiency.  

In addition, traditional retailers are not the only ones operating across sales channels. Sales through 
on-line-only retailers account for over half of all on-line sales (56% of all internet sales of goods in 
2017, up from 50% in 2011) – figure 6. Brick-and-mortar retailers that sell on on-line platforms on-
line marketplaces account for a large share of sales (36% in 2015). 

Figure 6: Share of on-line-only retailers in retail sales 

Share of on-line-only retailers in total EU on-line retail 
sales (in %) 

58

56

54

52

50

48

46

Share of online-only
retailers

2011 2012 2013 2014 2015 2016 2017

Source: Euromonitor Passport Database 

However  these  on-line-only  retailers  are  increasingly  opening  up  physical  shops  to  cater  to 
consumers  that  wish  to  handle  products  or  ask  for  advice  before  buying,  or  obtain  their  product 
immediately. According to a recent competition inquiry, 8% of respondents  to a survey of on-line-
only retailers report that they plan to open a brick-and-mortar shop within the next two years.33 To 
allow these new hybrid business models to grow, seamless requirements for establishment and daily 
operations will therefore be important. 

In addition, it will be important to clarify how retail-specific rules apply to e-commerce. In a recent 
survey carried out by the European Commission, national authorities explained that in most cases, 
rules concerning daily operations in retail – such as rules on promotions and sales – also apply to e-
commerce.  Furthermore,  e-commerce  specific  rules  exist  which  may  affect  the  growth  of  on-line 
sales:  certain  countries  require  e-commerce  sellers  to  establish  a  local  website,  which  in  some 
countries such as Germany requires a physical establishment. In Italy, a license is required from local 

32 Flash Eurobarometer 413: Companies engaged in online activities; 2015, page 41  
33 European Commission e-commerce sector inquiry, 2015; 
http://ec.europa.eu/competition/antitrust/sector_inquiries_e_commerce.html. 

12 

 
 
  
                                                            
authorities to start trading on-line. Whereas it is unclear if and how these rules are enforced, these 
elements add to the legal uncertainty for retailers. 

2.2.2.  Digitisation of stores and the supply chain 

E-commerce  is  only  one  aspect  of  the  increasing  digitisation  of  the  retail  sector.  Retail  business 
processes  are  increasingly  digitised  and  automated  from  the  supply  chain  onwards.  The  share  of 
retailers that report that their business processes are automatically linked to those of customers or 
suppliers is higher than the EU average (27% vs 18% of companies). A majority (59%) of retailers use 
Big Data34 to optimise their processes – a higher proportion than the EU average of 45%. The use of 
Big Data extends to on-line sales. According to the Commission's e-commerce sector inquiry, the use 
of price-tracking technologies is widespread. 53 % of the respondent retailers track the on-line prices 
of  competitors,  of  which  67  %  use  automatic  software  programmes.35  Technology  is  also  used  in-
store  to  respond  to  the  demands  of  digitally-savvy  customers.  Shops  increasingly  offer  free  wi-fi, 
touch-screens, or develop mobile apps that can be used to facilitate in-store purchases.  

However,  many  small  retailers  are  still  at  the  early  stage  of  technology  usage.  There  are  inherent 
barriers for technology driven innovation for small retailers including: lack of awareness, difficulty in 
raising finance, limited availability of expert labour, lack of time to gain new skills, marginal room for 
risk,  as  well  as  regulatory  constraints  and  requirements.  Barriers  to  the  adoption  of  new 
technologies are arguably higher for small businesses: while large retailers are able to attempt and 
fail with a new concept without going out of business, small retailers' scope for failure is much more 
limited. 

The use of new technologies and innovation has been linked to increased productivity and growth.36 
Such  developments  could  therefore  contribute  to  improving  the  performance  of  the  retail  sector. 
Public  support  can  provide  resources  and  expertise  to  reduce  the  risk  of  failure  in  adopting  new 
technologies,  which  can  be  crucial  in  enabling  small  retailers  to  adopt  technologies  to  modernise 
their  business.  The  Commission 
is  publishing  a  guide  for  fostering  the  revitalisation  and 
modernisation of the small retail sector.37 This primarily targets the practical actions local authorities 
can take to tailor initiatives, gathered from across Europe, to encourage small retailers to embrace 
technological changes and use them to modernise and revitalise. 

34 Data sets so voluminous and complex that usual data processing software is insufficient to process it. This 
term often refers to user behaviour analytics and other advanced data analytics.  
35 European Commission e-commerce sector inquiry, 2015; 
http://ec.europa.eu/competition/antitrust/sector_inquiries_e_commerce.html. 
36 European Commission, Report on single market integration and competitiveness in the EU and its member 
states – 2015; http://ec.europa.eu/DocsRoom/documents/13418?locale=en. 
37 The guide has been produced based on the findings of the study Development of Solutions and an On-line 
Guide  on  Fostering  the  Revitalisation  and  Modernisation  of  the  Small  Retail  Sector  commissioned  by  the 
European  Commission  and  conducted  by  Ecorys,  the  Retail  Management  Institute  of  Saïd  Business  School 
(University of Oxford) and Gartner. 

13 

 
 
 
 
                                                            
3.  How restrictive is the retail sector – Retail Restrictiveness 

Indicator (RRI) 

The retail sector is highly regulated in most Member States. Often, retail is subject to regulations at 
national,  regional  and  local  level.  When  they  restrict  the  freedom  of  establishment  or  the  free 
provision  of  services  in  the  retail  sector,  Member  States  need  to  ensure  that  their  rules  are 
compatible  with  the  EU  law.  In  particular,  because  they  are  discriminatory  or  are  in  other  ways 
particularly restrictive, certain requirements have been prohibited by the Services Directive (Article 
14). This is the case of economic need tests and involvement of competing operators in the decisions 
of  competent  authorities,  which  are  particularly  relevant  for  the  retail  sector.  Other  types  of 
requirements  can  be  justified  by  public  policy  objectives  (Article  15  of  the  Services  Directive).  In 
certain cases, requirements can only be justified on the basis of limited public interests enumerated 
in EU law (e.g., under Article 3 of the E-commerce Directive and Article 16 of the Services Directive) 
Furthermore,  even  to  the  extent  that  a  public  interest  can  be  invoked  to  justify  a  restriction, 
Member  States  must  comply  with  the  principles  of  non-discrimination,  proportionality  and  legal 
certainty. 

Retailers  face  establishment  restrictions  when  they  seek  to  open  a  shop.  They  also  encounter 
operational restrictions influencing their day-to-day business activities.  

Selecting the right location for retail development and the timely start of operations are decisive for 
business success. Retail establishment restrictions may significantly affect the  possibility to open a 
shop or hinder the development of specific business models or store formats. This document covers 
both retail establishment conditions and procedures for establishment.  

Also operational restrictions may have a negative impact on the daily operations of retail companies. 
They  sometimes  become  a  significant  burden  for  businesses  affecting  their  efficiency,  productivity 
and the quality and price of products offered.  

This  document  examines  retail-specific  regulations.  With  the  exception  of  territorial  supply 
constraints,  the  focus  is  on  regulations  put  in  place  by  competent  authorities  and  not  restrictions 
created by the behaviour of private operators.  

The  existing  regulatory  frameworks  have  been  designed  for  brick-and-mortar  retail.  However,  e-
commerce is growing at double-digit figures in the EU each year and its share in the value of total 
retail sales is increasing each year.  

Since  1998  the  OECD  has  regularly  assessed  the  restrictiveness  of  regulations  governing  the  retail 
companies  through  the  product  market  regulation  indicator  (PMR).  The  Commission  services 
attempted to measure the level of restrictiveness of restrictions imposed on the retail sector across 
the EU with the use of a composite indicator – the Retail Restrictiveness Indicator (RRI). It combines 
a  number  of 
indicators  covering  key  areas  of  regulatory  requirements  concerning  retail 
establishment  (the  establishment  pillar)  and  operations  (the  operations  pillar)  -  figure  7.  It  goes 
further  than  the  OECD  indicator  to  try  to  better  capture  the  complexity  and  diversity  of  the 
regulatory frameworks in place in the Member States. This will allow comparison between Member 

14 

 
 
 
States, monitoring of the developments over time and should induce a positive dynamic leading to 
more open and competitive retail markets.38  

Figure 7: Components of the Retail Restrictiveness Indicator 

In  the  overall  RRI  composite  indicator,  the  part  of  the  indicator  covering  issues  linked  to  retail 
establishment (opening of new outlets) has been given a higher importance (60 %), as compared to 
the part reflecting restrictions to operations (40 %). The methodological details of this exercise are 
explained  in  the  Annex  1  to  this  Staff  Working  Document.  They  have  also  been  consulted  with 
Member States within the Expert Group on the Services Directive.39 A relevant statistical assessment 
of the RRI framework has been carried out by the JRC Competence Centre on Composite Indicators 
and Scoreboards (COIN).40 

38 The indicator constitutes a factual overview of restrictions in Member States. Rules on distribution channels 
for  specific  products,  such  as  alcohol,  tobacco  and  non-prescription  medicines  are  included  for  the  sake  of 
completeness  of  the  restrictiveness  picture.  This  is  without  prejudice  to  the  health  and  societal  policy 
objectives pursued by Member States. The Commission shares these objectives and has developed dedicated 
policies  and  legislation,  particularly  on  restriction  of  tobacco  sales  and  advertising,  and  to  guarantee  high 
standards of quality and safety of medicinal products. It also supports Member States policies on the reduction 
of alcohol related harm. 
39 The Expert Group has been set up for the Commission to work with Member States to ensure the effective 
implementation and enforcement of the Services Directive as well as the further development of certain of the 
obligations contained in the Directive. It is composed of representatives of Member States. 
40  The  Joint  Research  Centre  (JRC)  Competence  Centre  on  Composite  Indicators  and  Scoreboards  (COIN), 
Statistical  assessment  of  the  Retail  Restrictiveness  Indicator  (RRI);  analysis  carried  out  for  the  European 
Commission. 

15 

 
 
 
                                                            
Figure  8  below  presents  the  overall  results  for  all  EU  countries,  for  the  end  of  201741.  Those  with 
stricter  requirements  were  given  higher  scores.  Detailed  results  for  the  establishment  and  the 
operations parts are presented in dedicated sections of this document. 

Figure 8: The Retail Restrictiveness Indicator 

Source: own calculations based on information collected from Member States and through dedicated studies 

Although  the  indicator  helps  to  illustrate  the  restrictiveness  level  and  compare  it  across  the  EU,  it 
has  its  limitations  and  the  results  should  be  viewed  in  a  broader  perspective.  In  particular, 
information  behind  the  overall  values  of  the  RRI  and  the  values  for  particular  indicators  can  be 
informative for identification of best practices as well as areas where countries could still improve. 

4.  Restrictions to the establishment of retail shops 

4.1.  Introduction 

41 In some cases, when important changes took place after December 2017, the information has been updated 
and taken into account in the scores.  

16 

 
 
 
 
 
 
                                                            
Opening new shops is a retailers' way to develop and build scale. The choice of the right format, and 
hence the right size of a shop is a key element of the decision taking, as is the shop's location and 
the timely start of operations.  

The  Commission  services  carried  out  an  extensive  fact-gathering  exercise  regarding  retail 
establishment  both  as  regards  conditions  and  procedure  for  establishment.  Throughout  2014,  the 
Commission  services  together  with  the  Member  States  carried  out  a  peer  review  of  retail 
establishment  regulatory  frameworks  in  the  Member  States.  This  exercise  was  supported  by  a 
dedicated study42 and complemented by two workshops43 . In addition, some of the questions asked 
in the open public consultation related to this issue.44  

Most  Member  States  regulate  retail,  including  the  establishment  of  retail  shops.  Very  often,  retail 
establishment 
level.  Retailers  enjoy  the  freedom  of 
establishment and the free movement of services as enshrined in the Treaty and in secondary law 
such as the Services Directive.45  

is  regulated  at  regional  and/or 

local 

The following provisions of the Services Directive are particularly relevant for retail establishment: 

- Articles 9 and following regulate the conditions for authorisation schemes.  

- Article 14 prohibits certain particularly restrictive requirements such as economic needs tests;  

-Article  15  states  that  certain  other  requirements  such  as  territorial  restrictions  have  to  be  non-
discriminatory, duly justified and proportionate.46      

To the extent that the Services Directive, the E-commerce Directive or other EU secondary law is not 
relevant, the fundamental freedoms apply, so that restrictions are prohibited unless they are non-
discriminatory, justified on the ground of an overriding reason of public interest, proportionate and 
compliant with legal certainty. 

Certain requirements are as such prohibited and may not be justified (e.g. under Article 14 Services 
Directive). In certain cases, requirements may only be justified on the basis of limited public interests 
enumerated  in  EU  law  (e.g.,  under  Article  3  of  the  E-commerce  Directive  and  Article  16  of  the 
Services  Directive).  Furthermore,  when  setting  up  authorization  schemes  and  procedures  Member 
States  must  comply  with  a  number  of  detailed  prescriptions  set  out  in  Articles  9-13  Services 
Directive,  which  constitute  full  harmonization  and  therefore  leave  no  margin  of  manoeuvre  for 
Member States. Other types of requirements (Article 15 of the Services Directive) can be justified by 
public policy objectives and Member States enjoy a margin of discretion, which is however limited: 

of 

out 

and 

carried 

42  Holland  van  Gijzen  Advocaten  (2016)  Legal  study  on  retail  establishment  through  the  28  Member  States: 
Restrictions 
Commission, 
establishment 
freedom 
http://ec.europa.eu/DocsRoom/documents/16127.  
43 On 8 July and 3 December 2014. 
44  Commission  Staff  Working  Document  "Public  Consultation  on  Retail  regulations  in  a  multi-channel 
environment – Synopsis Report", SWD(2018) 237. 
45  The  ECJ  confirmed  that  retail  falls  within  the  scope  of  the  Services  Directive  (see  judgment  of  30  January 
2018, Visser Vastgoed Beleggingen, C-31/16). 
46  For further clarification regarding these provisions, please refer to the Handbook on the implementation of 
the Services Directive https://publications.europa.eu/en/publication-detail/-/publication/a4987fe6-d74b-4f4f-
8539-b80297d29715. 

European 

the 

for 

17 

 
 
                                                            
Member  States  must  justify  these  restrictions  on  the  ground  of  legitimate  public  interests  such  as 
town and country planning, protection of the environment protection of consumers. Such objectives 
are  legitimate  and  have  been  recognised  as  such  by  the  Court  of  Justice  of  the  European  Union 
(ECJ).47  These  objectives  cover  a  wide  range  of  Member  States  concerns  such  as  urban  planning, 
maintaining vitality of city-centres, social housing policy, reducing environmental impact and traffic. 
The  protection  of  cultural  heritage  is  also  an  objective  invoked  by  Member  States  to  justify 
restrictions.  By  contrast,  purely  economic  public  interests,  such  as  ensuring  the  profitability  of  an 
undertaking  or  a  class  of  undertakings  or  the  promotion  of  the  national  economy  or  its  proper 
functioning,  can  never  be  invoked  by  Member  States  to  justify  a  restriction  to  the  fundamental 
freedoms.48 

As  indicated  above,  Member  States  have  a  margin  of  discretion  in  regulating  the  retail  sector. 
However when exercising this power, they need to respect EU law and in particular, the freedom of 
establishment and the free movement of services, including Services Directive.49  The ECJ confirmed 
that  retail  is  a  service  and  as  such  falls  within  the  scope  of  the  Services  Directive.50  The  ECJ 
confirmed51  that  the  Services  Directive  applies  to  retail  establishment  irrespective  of  the  way 
Member States regulate retail establishment, whether through an authorisation scheme or through 
town and country planning. The ECJ stated in its judgment that the Services Directive allows public 
policy objectives to be duly taken into account and that Member States have a margin of discretion 
in  the  way  public  policy  objectives  are  fulfilled.  However,  to  be  compatible  with  the  Services 
Directive,  Member  States  need  to  ensure  that  regulatory  requirements  relating  to  retail 
establishment are not only justified by an overriding reason relating to the public  interest, but are 
also proportionate.52 

Within the EU, retail establishment is regulated in very diverse ways. Some Member States provide 
for a retail establishment authorisation while others regulate retail establishment through planning. 
In some Member States the two ways may co-exist. Irrespective of the way Member States regulate 
retail establishment, these rules fall within the scope of the Services Directive.53  

Under the Services Directive, clear and transparent criteria regarding establishment or free provision 
of services are important for retailers in order to have legal certainty. In addition, procedural aspects 
also play an important role. In practice, retail establishment procedures are often long, complex and 
not transparent. The time it takes to start operations can be delayed by many procedural obstacles. 
Such delays have a negative impact on the viability of a project  – which was designed in a specific 
market setting – and cause significant costs. 

The following chapters provide information on the conditions of and procedures for establishment in 
the Member States.  

47 Judgment of the Court of 24 March 2011, European Commission v Spain, Case C-400/08, EU:C:2011:172. 
48  Judgments  of  22  December  2010,  Yellow  Cab,  C-338/09,  para.  51;  of  21  December  2016,  AGET  Iraklis, 
C-201/15, para. 72. 
49 Directive 2006/123/EC on services in the internal market. 
50 Judgment of 30 January 2018, Visser Vastgoed Beleggingen, C-31/16. 
51 Judgment of 30 January 2018, Visser Vastgoed Beleggingen, C-31/16, par.124. 
52 Article 15(3)(c) of the Services Directive. 
53 Judgment of 30 January 2018, Visser Vastgoed Beleggingen, C-31/16. 

18 

 
 
 
                                                            
4.2.  Conditions for establishment 

Usually, specific conditions must be met for establishing a new shop. These conditions vary across 
Member States depending on the size of the shop and on the intended location.  

The following sections explore in more detail the rationale and consequences of these conditions.  
The  information  presented  reflects  the  state  of  play  at  the  end  of  2017.  Important  changes 
introduced later and brought to the attention of the Commission have also been taken into account. 

4.2.1.  Conditions relating to size (thresholds) 

Large shops are appealing to consumers who search for a wide choice of products and lower prices. 
By  contrast,  small  shop  would  attract  consumers  looking  for  convenient  and  quick  shopping,  and 
possibly a more personal contact with the retailer.  

Large  premises  usually  mean  economies  of  scale,  higher  productivity  and  efficiency.  Where  retail 
margins  for  mass  products  (fast  moving  consumer  goods,  clothing,  etc.)  are  rather  low,  retailer 
profits  depend  on  the  scale  of  the  turnover.  Also,  for  some  specific  voluminous  products  (e.g. 
furniture or large household appliances) retailers simply need sufficient selling space to display their 
offer. On the other hand, small shops often apply higher margins and can be more suitable for less 
populated  areas,  and  for  niche  products  or  products  that  require  good  customer  service  and 
dedicated shop assistants. 

Member States often apply different rules to retail establishment projects depending on the size of 
the  planned  retail  shop  (size  thresholds).  Retailers  take  the  thresholds  existing  in  Member  States 
into  account  when  planning  new  openings.  These  thresholds  have  the  effect  of  artificially  shaping 
the retail landscape. They act as market entry criteria making more difficult or prohibiting the entry 
on the market of retailers with innovative or new business models not foreseen when the thresholds 
were set.   

Member  States  justify  setting  size  thresholds  for  retail  shops  on  the  ground  of  public  policy 
objectives  such  as  environment  protection,  consumer  protection  and  town  and  country  planning. 
Shops of different sizes have different impacts on the area. Large outlets have a greater impact on 
the local environment and usually create more traffic. They can also change the market conditions 
for consumers as well as for existing operators, create new jobs and bring revenues to local budgets. 
A small shop usually has a smaller impact, however, a group of smaller shops can have an impact on 
the area and the local population compared to one larger outlet. 

19 

 
 
 
 
 
 
 
It appears that in most Member States, there is no reliable methodology to define the thresholds. 
Many  authorities  simply  apply  commonly  accepted  statistical  definitions54,  whereas  the  level  of 
thresholds should be based on objective, transparent and non-discriminatory criteria. 

Regulation in Member States 

Thresholds  are  very  different  from  one  Member  State  to  another.  Through  thresholds,  Member 
States  draw  the  line  between  large  retail  outlets  and  small  retail  outlets.  In  some  cases,  Member 
States  add  other  thresholds  to  define  medium  retail  outlets  and  extra-large  retail  outlets.  In 
consequence, the definition of extra-large, large, medium or small retail outlets corresponds to very 
different situations depending on the Member State. In addition, in some Member States, different 
thresholds may apply depending on the part of the country where the retailer wishes to establish. 
This is the case in particular in Member States where retail falls within the competence of regional or 
local authorities.   

The  consequences  of  falling  in  one  or  another  category  vary.  Depending  on  the  Member  State,  it 
triggers  the  need  to  apply  for  a  special  retail  authorisation,  to  fulfil  additional  requirements  or 
provide  impact  assessments.  There  may  be  a  ban  on  establishing  above  a  certain  threshold. 
Thresholds may also determine the authorities competent to deal with the establishment planned.  

For example, in Belgium55, Luxemburg and Hungary the threshold is set at 400 m². Retailers planning 
to open a shop that is below this threshold would be required to notify the authorities (on top of a 
usual  building  or  planning  permit  if  such  is  required  for  any  construction  of  this  size).  For  a  shop 
above this threshold, they would need to apply for a special retail authorisation.  

In Italy,  the threshold may  even  be  lower:  150  or  250  m²  depending  on  the  area/region.  In  Spain, 
where  the  thresholds  are  set  by  the  Autonomous  Communities,  the  lowest  is  500  m²,  the  highest 
amounts to 4000 m², whereas the most common one is set at 2500 m². The French authorities have 
set the threshold for retail authorisation at 1000 m². In Portugal, it depends on whether the retailer 
intends to build a stand-alone shop (2000 m²) or whether the shop is part of a shopping centre, in 
which case only shops above 8000 m² would need to be specifically authorised. 

Apart from the retail authorisation, some authorities also apply special criteria for large retail shops, 
such  as  additional  impact  assessments  or  permits  from  several  public  bodies,  or  in  general  more 
complex procedures. 

In Belgium, retailers have to provide an additional impact report if the planned shop is larger than 
1000 m² and an impact assessment if it exceeds 4000 m². In Italy, for shops over 1500 m² or 2500 m² 
(depending on the region), a prior governmental approval is required.  

54 Such definitions related to the size of shop have been developed by statistical institutes or market research 
companies for data collection purposes, e.g. Eurostat uses size thresholds to classify the data on shops' sales 
area.   
55 In Wallonia and Flanders, rules currently under revision in the Brussels region. 

20 

 
 
 
 
 
 
 
                                                            
In Austria and Germany, shops with floor surface above 800m² are subject to an in-depth scrutiny by 
authorities. In the UK, retailers planning a shop above 2500 m² outside city centres need to undergo 
a specific procedure. In Cyprus, the authority in charge is different depending on whether the shop 
surface is below or above 1500 m². In Finland, a retail project above 4000 m² needs to be included in 
land use plans, whereas in Poland a project of 2000 m² or more is allowed only if the plot is covered 
by the local plan defining the zones suitable for large shops. 

The strictest rules in place forbid operators to build an establishment above a certain size in a certain 
location. In Denmark, grocery shops cannot be larger than 1200 / 3900 / 5000 m², depending on the 
location. In Ireland, similar conditions apply to shops above 3000 / 3500 / 4000 m², depending on 
the region.  

4.2.2.  Level of detail in spatial plans  

Prohibited restrictions  such as  economic tests  must  be  abolished by  Member  States,  regardless  of 
where  they  are  set  out  (in  spatial  planning  rules  or  elsewhere).  Beyond  that,  rigid  planning  limits 
considerably  the  possibilities  to  locate  shops  in  zones  which  are  nevertheless  dedicated  to 
commercial activities. It may make it more difficult or prohibit the entry to the market of retailers, in 
particular with innovative or new business models not foreseen when the plans were set.    

This  is  particularly  detrimental  for  large  retail  shops  which,  because  of  their  size,  will  face  more 
difficulties  to  establish.  Member  States  must  prove  that  such  restrictions  are  non-discriminatory, 
justified on the basis of an overriding reason of public interest and proportionate. The principle of 
proportionality may require in certain circumstances that Member States while pursuing legitimate 
public policy objectives, allow for derogations to planning rules.  

The principle of proportionality is also important for the change of use of premises. If the plan allows 
for a commercial use in general, it is easier for owners or tenants to change the use of premises, for 
example from a bank to a shop. Such flexibility helps in filling vacant premises in city centres. 

In  certain  Member  States,  the  authorities  specify  spatial  plans  with  a  high  level  of  detail.  The 
specifications can be set out at a more general or more detailed level. The local spatial plans may:  

 
 

 
 

refer to "commercial use"  
refer  to  "retail  use"  or  distinguish  between  food  and  non-food  retail  or  between 
small and large shops 
specify the type of products that can be sold (for example furniture shops, DIY, etc.)  
introduce further requirements 

The level of detail of the urban plans has an impact on the flexibility of retail establishment and on 
the structure of the market. That must be taken into account in the proportionality analysis.   

21 

 
 
  
 
 
 
Regulation in Member States 

In  most  Member  States56,  local  plans  indicate  zones  dedicated  to  the  "commercial  use",  which 
makes  such  zones  open  for  a  wide  range  of  businesses,  including  retail,  food  and  drink  services, 
financial  services,  crafts,  etc.  Similarly,  the  decisions  issued  in  those  countries  refer  to  the 
"commercial use" too.  

In Germany, the Netherlands, Slovenia and Spain, local plans distinguish areas which can be used for 
retail specifically. In Greece, Italy, Lithuania and Poland, plans also separate areas where large and 
small shops can be built, whereas in Belgium (Brussels and Wallonia) plans distinguish between food 
and non-food retail outlets. Finally, the most prescriptive approach to local plans has been observed 
in Flanders (Belgium), Denmark and Luxemburg, where the types of goods to be sold are specified 
(going beyond the distinction between food and non-food products), as well as, in some cases, the 
maximum possible floor space. 

The  above  classification  refers  to  simplified  concepts,  to  allow  comparisons  between  differing 
national systems – figure 9. 

Figure 9: Level of detail in local spatial plans 

  plans may refer to e.g. 
types of goods that can be sold 

 plans usually refer to 
"retail use" or designate areas 
for larger shops 

 plans usually refer to 

"commercial use" 

Source: based on information collected from Member States and through a dedicated study 

4.2.3.   Location-specific rules  

56  Austria,  Bulgaria,  Croatia,  Cyprus,  the  Czech  Republic,  Estonia,  Finland,  France,  Hungary,  Ireland,  Latvia, 
Malta,  Portugal, Romania, Slovakia, Sweden and the UK. 

22 

 
 
 
 
 
 
                                                            
Selecting the right location is decisive for business success. However, prohibited restrictions such as 
economic  tests  must  be  abolished  by  Member  States,  regardless  of  where  they  are  set  out  (in 
location-specific rules or elsewhere). Beyond that, by introducing or keeping location-specific rules 
Member States  restrict the freedom  of  establishment, so  that they  must prove that they are  non-
discriminatory, justified on the grounds of an overriding reason of public interest and proportionate. 
In particular, keeping city-centres vibrant is a concern in many Member States. Vacancies of shops in 
city-centres  are  becoming  more  and  more  frequent  and  in  certain  Member  States  are  taking 
alarming  proportions.  Whereas  this  is  a  legitimate  public  interest  which  the  Commission  shares, 
Member  States  must  carry  out  a  detailed  proportionality  test  also  for  those  requirements,  as  is 
required in the case law.57    

In France, on average, the percentage of vacant shops was 7.2% in 2012 and is 11.7% in 2017.58 In 
the Netherlands, on average, more than 9% of total shop floor area was unoccupied in 2015 and the 
percentage  has  been  on  the  rise  since  2008.59  Across  the  UK,  store  vacancy  rates  have  increased 
from  5.4%  in  December  2008  to  14.1%  in  March  2013,  a  rise  of  161%.  Without  intervention,  the 
vacancy rate can rise yet further, perhaps above 20%.60 

Maintaining the vitality of city-centres is undisputedly a legitimate public objective. As indicated by 
the  ECJ,  restrictions  relating  to  the  location  of  retail  shops,  in  particular  large  ones,  appear  to  be 
methods suitable for achieving this objective.61  

Often, public authorities seek to achieve this objective by restricting establishment in the periphery 
of towns. Their concern is that shops there would attract consumers away from city centres.  

Such  rules  amount  to  territorial  restrictions  falling  within  the  scope  of  Article  15  of  the  Services 
Directive.  This  provision  contains  a  list  of  restrictions  which  constitute  severe  obstacles  to  the 
freedom  of  establishment  but  could  be  justified  if  non-discriminatory,  justified  on  the  basis  of  an 
overriding reason of public interest and proportionate. As it follows from the case law62 , territorial 
restrictions limit the number of retailers and thus hinder new operators from entering the market.  

Products-related  restrictions  which  prohibit  or  limit  the  establishment  of  shops  depending  on  the 
products sold do not appear to be proportionate. They may be based on lists of city centre relevant 
assortments  or  on  the  distinction  between  voluminous  goods  and  non-voluminous  goods.  In 
practice, this leads to the prohibition of the establishment of shops selling these products without 
further consideration relating for instance to the shop business model. Some formats cannot fit in 
city  centres  because  they  need  larger  retail  space  and  cannot  afford  the  prices.  This  means  that 
these  shops  will  neither  establish  in  city  centres  nor  outside  city  centres.  It  seems  simplistic  to 
consider that since consumers will not be able to purchase products outside city-centres, they will 
be forced to go into town to get them. Retail is about selling goods but it also consists inter alia of 

57 Visser, cit. para. 129. See also judgment of 6 March 2018, Segro and Horvath, C-52/16 and C-113/16, para. 
85. 
58 Le Procos, fédération pour l’urbanisme et le développement du commerce spécialisé. 
59 Government of the Netherlands - Environmental Data Compendium. 
60 Centre for Retail Research – the UK. 
61 Judgment of 24 March 2011, European Commission v Spain, C-400/08, paragraph 80. 
62 
Services  Directive, 
the 
the 
https://publications.europa.eu/en/publication-detail/-/publication/a4987fe6-d74b-4f4f-8539-b80297d29715. 

effect  Handbook 

implementation 

that 

See 

on 

to 

of 

23 

 
 
                                                            
selecting  the  assortment  and  offering  a  variety  of  services  appealing  to  consumers,  to  attract  and 
induce them to buy the goods. On-line trade makes this point even more obvious: if it is only to buy 
goods, consumers may choose to shop on-line ('any time and from anywhere').    

In the context of the rapid development of e-commerce, Member States are bound by the principle 
of proportionality. In that context it is to be ascertained whether in order to improve the vitality of 
city centres, less restrictive means than restrictions to retail establishment are available to Member 
States.  

In that respect, the Commission is publishing an on-line, easily printable guide63, aimed primarily at 
national, regional and local authorities on how they can contribute in compliance with the principle 
of proportionality to promoting the revitalisation and modernisation of small retailers, with a focus 
on digitalisation. 

The guide proposes practical solutions to revitalise and modernise the small retail sector. They are 
based on analyses performed on all EU28 Member States that identified over 200 typical local and 
regional  initiatives.  The  effectiveness  of  these  actions  proved  to  be  built  on  professionalism  and 
competence, the strength of stakeholder relationships, a shared belief and a willingness to change. 
These  elements  were  found  to  require  the  support  of  a  clear  organisational  structure,  community 
involvement and technology input.  

Regulation in Member States 

In  Cyprus,  Ireland,  Malta  and  the  UK,  a  retailer  is  required  to  consider  a  city  centre  location  as 
primary in their establishment plans and only if this is not possible, consider a location further from 
the city centre. Also in Finland, a retailer would need to apply for a specific derogation to the land 
use plan to establish outside city centre, and in Germany and Luxemburg, it is difficult or impossible 
to establish large shops outside town centres as this might have a negative effect on the centres.  

There are also rules which specify concretely the type of assortment that can be sold only in shops in 
city centres. Such restrictions exist in Austria, Germany and in the Netherlands, where the decision is 
left to municipalities.  

In  Denmark  and  Sweden,  public  authorities  take  measures  to  protect  city  centre  retail  trade.  In 
Slovenia, when planning shopping areas, a balance between the development of the city centre and 
the  periphery  is  considered  so  as  to  ensure  the  vitality  and  attractiveness  of  the  city  centre.  New 
shopping areas can be located at the periphery of the settlement only under condition that they do 
not endanger the vitality of the city centre. 

In a number of Member States, there are also rules that actually limit the type of shops that can be 
established in a city centre, which is sometimes linked to protection of areas of historical interest. 

63 The guide has been produced based on the findings of the study "Development of Solutions and an On-line 
Guide  on  Fostering  the  Revitalisation  and  Modernisation  of  the  Small  Retail  Sector"  commissioned  by  the 
European  Commission  and  conducted  by  Ecorys,  the  Retail  Management  Institute  of  Saïd  Business  School 
(University of Oxford) and Gartner.  

24 

 
 
 
 
                                                            
 
For example, in Italy, it is more difficult to open a larger shop in the city centre (the decision has to 
be taken by a body at a higher level), and some municipalities can impose a total threshold for retail 
surface for a city.  

Figure 10: Member States with regulations specific to location 

Source: information collected from Member States and through dedicated studies 

4.2.4.  Use of economic data 

The  Services  Directive,  by  codifying  the  case  law,  prohibits  inter  alia  "economic  needs  tests"  as  a 
requirement  for  establishment.  Under  Article  14  (5)  Services  Directive,  economic  needs  tests  are 
tests  that  make  the  granting  of  an  authorisation  subject  to  proof  of  the  existence  of  an  economic 
need  or  market  demand,  an  assessment  of  the  potential  or  current  economic  effects  or  the 
appropriateness of the activity in relation to the economic planning objectives set by the competent 
authorities.  The  Services  Directive  clarifies  however  that  the  prohibition  set  out  in  this  provision 
does  not  concern  territorial  planning  requirements  which  do  not  pursue  economic  aims  but  serve 
overriding  reasons  relating  to  the  public  interest,  such  as  the  protection  of  the  environment, 
including the urban environment, or the safety of road traffic.  

Against  this  background,  many  Member  States  reviewed  their  conditions  for  establishment  when 
implementing the Directive and removed economic needs tests64. 

64 Economic needs test have been removed in Belgium, France, Luxembourg, Italy, the Netherlands, Romania 
and from the concerned regions of Spain. 

25 

 
 
 
 
 
                                                            
The dividing line between economic needs tests and genuine territorial planning requirements rests 
not on the form or the name of the rule but on its content. Information which is required to evaluate 
offer and demand should not be used by competent authorities for the purposes of establishment. 
Requiring  such  information  could  only  serve  economic  aims  and  as  such  would  constitute  an 
economic needs test within the meaning of Article 14(5) Services Directive.  

This is the case of information relating to the number, the types and the formats of existing shops 
which  has  a  direct  meaning  to  evaluate  the  offer.  In  the  same  way,  for  the  purposes  of 
establishment  competent  authorities  should  not  use  or  request  information  on  the  purchasing 
power  or  household  consumption  or  population  in  the  relevant  establishment  area  as  well  as 
information relating to the potential catchment area which has a direct meaning in the definition of 
demand.  

Regulation in Member States 

In  some  Member  States,  municipalities  require  economic  data  as  part  of  the  process  in  the 
application for new establishment – figure 11.  

In  Denmark,  a  retail  trade  analysis  is  often  carried  out  by  municipalities,  for  which  data  may  be 
requested  from  private  developers.  Its  purpose  is  to  assess  whether  there  is  a  consumer  base  for 
more retail units in the area.  

In the Netherlands, the municipalities often perform a test aimed at assessing the local market and 
the need for a new shop. In Sweden, it may happen that municipalities carry out trade assessments, 
however they do not request data from the applicant. 

In some German Länder, for establishment projects exceeding 800 m2, retailers have to provide an 
assessment of their potential catchment area. Opening of a new shop is prohibited if more than 30% 
of its turnover would be generated by customers whose place of residence lies outside the city and 
surrounding  area.  They  also  have  to  provide  an  impact  assessment  on  the  turnover  of  incumbent 
retailers  established  in  the  city  centres.  The  maximum  percentage  of  turnover  which  may  be 
distracted from incumbent retailers is set by law.  

In  both  Cyprus  and  Malta,  retailers  wishing  to  open  a  new  shop  are  requested  to  provide 
information concerning, among others, the estimated turnover of the existing outlets as well as the 
new one.  

Also in Ireland and in the UK, the local authorities  may request evidence for  a need for additional 
retail floor space.  

In  Member  States  with  a  decentralised  structure,  the  matter  of  retail  establishment  is  often 
delegated  to  the  regions  and  consequently  economic  data  might  be  requested  by  regional 
administrative  entities.  This  is  the  case  in  Italy.  In  the  procedure  of  granting  a  specific  retail 
authorisation, some of the Italian regions require an applicant to provide data of economic nature. 
Under Sicilian regional law, establishment of outlets in historical areas requires an assessment of the 
impact on small local shops. Under Piedmont regional legislation, with respect to establishment of a 

26 

 
 
 
 
large  shop  (bigger  than  1.800  m2),  data  must  be  provided  on  the  outlet's  economic  impact  on 
competition in the local market.   

In Luxembourg, for the granting of the retail authorisation for a retail outlet larger than 400 m2, the 
retailer  must  define  the  potential  the  catchment  area.  Furthermore,  the  decision-making  process 
takes  into  account,  among  others,  the  impact  and  consequences  of  the  project  on  the  balance 
between urban and rural areas (mainly city centre and outskirts) and the number of jobs expected to 
be created.  

Figure 11: Member States where economic data is required from the retailer 

Source: information collected from Member States and through dedicated studies 

4.3.  Procedures for establishment 

It is essential for brick-and-mortar retailers to be able to start their operations swiftly and smoothly. 
In practice, however, brick-and-mortar establishment can be stifled by long, complex and excessively 
burdensome establishment procedures and by difficulties in finding the relevant information.65 The 
time  it  takes  to  start  operations  can  be  delayed  by  many  procedural  obstacles.  Such  delays  are 
bound  to  have  a  negative  impact  on  the  viability  of  a  project  –  which  was  designed  in  a  specific 
market setting – and cause significant costs. 

65 See notably the Commission Staff Working Document "Public Consultation on Retail regulations in a multi-
channel   environment – Synopsis Report", SWD(2018) 237. 

27 

 
 
 
 
 
                                                            
In  this  part  examining  retail  establishment  procedures,  the  focus  is  on  the  number  of  permits 
required, the number of entities to be contacted or involved in the process, the number of impact 
assessments required as well as on the often long deadlines and transparency issues.  

The following sections explore in more detail the procedural difficulties in the retail establishment 
procedure.   

4.3.1.  Permits required in the establishment procedure 

In the establishment process, regardless of whether a specific authorisation is required or whether 
the  establishment  is  governed  by  planning  rules,  retailers  often  need  to  obtain  several  permits  to 
establish a new shop: a planning permit, a building permit, an environmental permit and a special 
retail  authorisation.  Permits  may  be  required  in  case  of  newly-built  premises,  a  modification  of 
existing  premises  or  a  change  of  use.  Such  procedures  entail  a  significant  investment  of  time  and 
resources on the retailer's side. This may act as entry costs to the point that firms which would have 
considered opening an establishment in the absence of regulation decide not to do so.66 

The  objective  is  not  to  assess  the  need  for  the  permits  at  issue.  It  is  undisputed  that  a  building 
permit or an environmental permit could be required in particular for large retail establishment. In 
the  same  way,  a  specific  retail  authorisation  may  be  needed  in  the  light  of  the  objective  at  stake 
(town and country planning and protection of the environment). The focus of this part is to identify 
good practices where some simplification has been introduced to avoid proliferation of permits and 
alleviate regulatory burden.  

The Services Directive provides for an ambitious programme of administrative simplification. Article 
5 to 8 of the Services Directive require Member States to simplify procedures, set up Points of single 
contact,  make information on national  requirements  and  procedures  easily accessible  and  provide 
for  the  possibility  to  complete  procedures  at  a  distance  and  by  electronic  means.  Furthermore, 
Article  13  of  the  Services  Directive  oblige  Member  States  to  process  applications  as  quickly  as 
possible.67  

Regulation in Member States 

In  most  Member  States,  urban  planning  constitutes  a  basis  for  establishment  decisions.  The 
authorities  grant  approval  for  a  particular  retail  project  in  form  of  a  planning  permit  (sometimes 
included  in  the  building  permit  or  another  procedure  combining  two  or  more  permits)  which 
confirms that the project is in compliance with the spatial plans.  

66 A. Pozzi, F. Schivardi (2015) Entry regulation in retail markets.  
67  For  further  details  –  see  Handbook  on  the 
implementation  of  the  services  directive  point  5 
https://publications.europa.eu/en/publication-detail/-/publication/a4987fe6-d74b-4f4f-8539-b80297d29715. 

28 

 
 
 
 
 
 
                                                            
  
Some Member States require a specific retail authorisation to establish a shop. Such authorisation 
can  either  replace  the  planning  permit  or  be  required  on  top  of  it.  While  the  requirement  for  the 
project  to  comply  with  the  spatial  plans  typically  applies  to  all  projects  regardless  their  size,  the 
specific retail authorisation in most cases applies only to shops above a particular size threshold (see 
section 3.2.1 on thresholds). 

Whether governed by specific retail authorisation or planning regulations, Member States regulatory 
frameworks often have mixed systems – as illustrated by the map below. 

Figure 12: Retail establishment regulatory frameworks in Member States 

or 

Planning 

planning 
permit 
approval, also when included in the building 
permit  (Austria,  Bulgaria,  Cyprus,  the  Czech 
Republic,  Denmark, 
Finland, 
Germany,  Ireland,  Latvia,  Lithuania,  Malta, 
the  Netherlands,  Poland,  Romania,  Slovakia, 
Slovenia, Sweden, the United Kingdom) 

Estonia, 

    Special  retail  authorisation  and/or 
planning 
approval 
permit/planning 
depending  on  the  location/region  (Greece, 
Spain) 

  Special retail authorisation (Croatia, 

France, Italy, Luxembourg) 

  Special  retail  authorisation  and 
Hungary, 
(Belgium, 

permit 

planning 
Portugal) 

Source: information collected from Member States and through dedicated studies 

In addition, building permits which confirm project’s compliance with certain technical requirements 
for  construction68  may  be  required.  For  premises  of  a  certain  size  or  deemed  to  have  potentially 
significant effects on the surroundings, an environmental permit may also be required.  

To  simplify  the  administrative  process  some  Member  States  have  introduced  fully  or  partially 
integrated  procedures.  All-in-one  permits  allow  retailers  to  submit  a  single  application  instead  of 
having  to  apply  for  several  permits.  Partially  integrated  permits  combine  at  least  two  but  not  all 
permits  required.  For  example,  they  can  include  planning  and  building  permits  but  other  permits 
such as  a  specific  retail authorisation  and/or  the environmental  permit  still  have to  be applied for 
separately.  

The graph below presents the situation in each Member State.69  

68 Other permits required to open a shop have not been listed here, as they either concern the operation of a 
shop rather than establishment (e.g. permits to sell food or other product-specific licences) or they only apply 
to  projects  in  particular  locations  (e.g.  heritage  protection  or  nature  conservation  permits),  or  use  permits 
which allow opening the premises to the public.  

29 

 
 
 
                                                            
Figure 13: Permits required in the establishment process  

 Source: information collected from Member States and through dedicated studies 

In  Estonia,  Germany,  Latvia  and  Sweden,  only  one  permit  is  required.  In  twelve  Member  States, 
simplification  efforts  have  been  made  and  businesses  can  apply  for  an  all-in-one  or  a  partially 
integrated permit. For example, in Belgium, new rules adopted  by the  three  regions have recently 
introduced an integrated procedure allowing businesses to apply for all types of permits in a single 
application submitted to a one-stop-shop. In France, the building permit includes the specific retail 
authorisation,  and  in  the  Czech  Republic,  the  joint  permit  replaces  the  planning  permit  and  the 
building permit. In Hungary, the so-called merged installation procedure encompasses up to seven 
different permits.  

4.3.2.  Entities involved in the establishment procedure 

To  assess  the  administrative  burden  on  the  applicant  in  a  retail  establishment  authorisation 
procedure it  is  also  important to  consider the  number  of  administrative  entities  which  need to  be 
contacted  to  obtain  the  necessary  permits.  Such  administrative  entities  include  authorities 
responsible  for  planning  and  building,  entities  charged  with  retail  development  but  also  those 
competent for particular  issues, such as the protection of the environment.  They can be found on 
different levels of national administration (municipal, regional or central). 

69 The scope of the analysis is limited to four types of permits, i.e. the planning permit, the building permit, the 
specific retail authorisation and the environmental permit.   

30 

 
 
 
 
 
                                                                                                                                                                                         
The  greater  the  number  of  authorities  that  have  to  be  contacted,  the  more  time  and  resource-
consuming  the  procedure  becomes  for  the  applicant.  It  may  be  necessary  to  submit  several 
application files and manage information received from several different authorities in parallel.  

In accordance with the Services Directive, Member States have to ensure that service providers can 
complete all procedures and formalities needed for access to and exercise of their services activities 
through  'points  of  single  contact'.  The  points  of  single  contact  are  meant  to  be  the  single 
institutional  interlocutors  from the  perspective  of  the  service  provider  so  that it  does  not  need  to 
contact several entities to complete all the necessary steps relating to his service activity.70  

Regulation in Member States 

In many Member States businesses still need to contact a separate entity for each required permit, 
e.g.  the  municipality,  a  regional  authority  charged  with  planning  and  building  matters  and  a 
governmental agency for the protection of the environment.  

In  some  Member  States,  there  is  only  one  administrative  entity  involved  in  the  authorisation 
procedure.  

Several  Member  States  have  introduced  one-stop-shops  representing  all  administrative  entities 
involved  in  the  authorisation  procedure.  It  means  that  the  applicant  needs  to  contact  only  one 
administrative  entity  and  has  a  single  interlocutor  on  the  side  of  the  authorities  coordinating  the 
replies from various competent bodies. This is the case in Austria, Belgium, France, Greece, Hungary 
and the Netherlands.  

In  France,  Italy  and  Lithuania,  it  is  possible  to  apply  for  a  retail  establishment  through  a  partially 
integrated contact point where some but not all competent authorities are represented. There, the 
applicant  still  needs  to  contact  another  entity  separately,  for  example  to  obtain  an  environmental 
permit.  It  is  often  the  municipality  or  a  planning  and  building  authority  that  acts  as  a  single  or 
partially integrated point of contact making sure that all other competent authorities are involved.  

The graph below shows the number of entities that have to be contacted in each Member State.  

Figure 14: Entities to be contacted in the establishment process 

70  For  further  details  –  see  Handbook  on  the  implementation  of  the  services  directive  point  5.2 
https://publications.europa.eu/en/publication-detail/-/publication/a4987fe6-d74b-4f4f-8539-b80297d29715. 

31 

 
 
 
 
 
 
                                                            
 
Source: information collected from Member States and through dedicated studies 

4.3.3.  Impact assessments required in the establishment procedure 

Retailers may be requested to provide a large amount of information within the retail establishment 
process. Competent authorities may require from the applicant to provide studies or other type of 
analysis or data to assess the various potential impacts of the project.  

Such requirements are likely to increase significantly the time needed to prepare the application and 
may  in  certain  cases  be  difficult  to  comply  with,  for  example  due  to  difficulties  in  gathering  the 
requested data. 

Firstly, in line with the section on the use of economic data, some impact assessments should not be 
requested  from  retailers  as  they  may  entail  assessing  the  existing  offer  and  demand  and  as  such 
amount to economic needs tests prohibited by the Service Directive.  

Regarding data which is not requested in the context of an economic need test, it must be justified 
on the basis of an overriding reason relating to the public interest and proportionate. Thus, data that 
is  sensitive  may  be required solely to  the extent  necessary  for  the pursuit  of  an  overriding  reason 
relating to the public interest.  

In  the  following  description  of  the  regulation  in  Member  States,  the  focus  is  on  the  number  of 
impact assessments required from retailers.  

32 

 
 
 
 
 
Pursuant  to  the  proportionality  principle,  Member  States  are  required  to  eliminate  the  impact 
assessments  which  are  not  justified  and  to  streamline  the  other  requirements  for  impact 
assessments to simplify the decision making process for retail establishment. 

Regulation in Member States 

More than half of Member States do not require applicants to provide specific impact assessments.71 
In those Member States which require impact assessments they mainly concern the impact on the 
local retail market (in particular, on the city centre), on employment and on traffic. That is likely to 
constitute  an  economic  need  test  under  Article  14(5)  Services  Directive  ("potential  or  current 
economic  effects  of  the  activity").  Some  Member  States  combine  several  of  the  above  mentioned 
aspects into one analysis (referred to as other impact assessments).  

In Italy, Spain and the UK, up to three impact assessments can be required. In seven Member States 
(Belgium, Cyprus, Germany, Ireland, Luxembourg, Malta, Netherlands) two impact assessments are 
required, whereas Austria and Hungary request only one.  

The  retail  impact  assessment,  i.e.  the  assessment  of  the  project's  impact  on  the  local  market, 
appears to be the most frequently requested. Often the objective is to assess the impact of the new 
shop on the city centre. This is the case of Cyprus, Germany, Ireland, Malta, The Netherlands and the 
UK.  

In  most  cases,  those  impact  assessments  are  required  only  for  large  retail  shops.  For  example  in 
Belgium the impact of  projects  above  a  certain  size  threshold72  is assessed  against  criteria  such as 
the integration in urban pattern, consumer protection, compliance with social and employment law, 
protection  of  urban  environment.  In  Luxembourg  the  retail  impact  assessment  applies  to  shops 
above  400m²  and  in  Germany  to  shops  above  800m².  In  both  cases,  the  catchment  area  and  the 
impact on city-centres  is  assessed.  73  In Italy  in  certain  regions  socio-economic impacts  of  medium 
and large shops, such as for example the impact on employment, are assessed. 

Figure 15: Impact assessments required for the establishment 

71 In accordance with the EU law, environment impact assessments are often required, in particular for large 
retail shops. These are not accounted for in this document. 
72 Rules vary depending on the region. 
73  In  Germany  retailers  may  be  required  two provide  two separate  impact  assessment  on  the  impact  of  the 
project on the catchment area and the city centre. 

33 

 
 
 
 
 
 
 
 
                                                            
Source: information collected from Member States and through dedicated studies 

4.3.4.  Length of the establishment procedure 

Lengthy procedures can have a negative impact on the viability of a project and lead to significant 
costs  for  businesses.  With  the  development  of  e-government  and  on-line  trade,  it  is  not  only 
required under Article 13(3) Services Directive but also important to shorten deadlines for brick-and-
mortar retailers to access the market. This would also support pure on-line retailers developing their 
physical presence. 

As  emphasized  in  the  responses  to  the  open  public  consultation,  the  use  of  electronic  procedures 
should make establishment procedures shorter. 

Regulation in Member States 

The specificity of the authorisation process, the planning framework in place and the administrative 
practice differ between Member States resulting in divergent deadlines for establishment decisions. 

34 

 
 
 
 
  
 
 
Deadlines  set  out  in  Member  States'  regulations  to  complete  the  formalities  to  establish  a  shop74 
range  from  1  to  12  months.75  However,  in  practice,  retailers  face  procedures  of  much  longer 
duration. 

The  type  of  project  and  in  particular  its  size  and  its  potential  impact  on  the  surroundings  may 
determine  the  type  of  procedure  to  be  followed  and  hence  its  length.  Decisions  concerning  large 
retail  outlets  which  require  additional  impact  assessments  and  additional  permits  (such  as  the 
environmental permit) would typically require more time. Environmental permit procedure can run 
in  parallel  to  other  procedures,  but  it  can  also  be  a  pre-condition  to  apply  for  other  necessary 
permits. For example in Croatia and Slovenia it is possible to apply for the building permit only once 
the  environmental  permit  has  been  granted.  The  deadlines  for  issuing  environmental  permits  in 
principle range from 3 to 18 months. However, in some Member States deadlines are not specified, 
so that the applicant cannot estimate the time needed to obtain a decision. 

In many Member States the conformity of the project with the planning framework can be decisive 
for the length of the authorisation process. For example in Denmark if the establishment complies 
with the local plan and does not require an environmental permit, the applicant would only need to 
obtain a building permit which takes up to 2 months. However, if the decision requires a change in 
the local plans and such a change is possible in a given Member State, the procedure can take up to 
3 years due to public consultations and possible appeals (e.g. in Finland and Sweden).  

Although  in  most  Member  States  the  length  of  the  procedure  is  in  principle  quite  limited,  the 
procedure  can  often  be  delayed  because  of  third  parties'  appeals.  Even  if  a  positive  decision  has 
been  issued,  it  may  take  years  until  the  retailer  can  effectively  start  its  activity  in  the  selected 
location.  

Some  Member  States  have  introduced  measures  to  ensure  that  appeals  are  based  on  substantive 
grounds.  In  France  an  administrative  appeal  is  mandatory  before  a  judicial  review  can  be  filed  in 
Court.  This  is  supposed  to  discourage  all  appeals  without  substantive  grounds  at  an  early  stage. 
Other Member States may require the fulfilment of specific conditions to be eligible for an appeal to 
avoid  opportunistic  appeals  by  third  parties,  e.g.  competitors  or  civil  society,  attempting  solely  or 
mainly  to  disrupt  the  on-going  retail  establishment  project  without  having  substantive  grounds  to 
appeal. 

4.3.5.  Transparency of the procedure for establishment in Member States 

Under  Article  13(5-7)  Services  Directive,  competent  authorities  must  inform  the  applicant  of  a 
number of procedural steps and details. The lack of clear communication from the authorities at any 
stage  of  the  process  can  be  confusing  and  detrimental  for  the  applicant.  For  example,  if  the 
authorities  do  not  communicate  clearly  when  the  file  has  been  deemed  admissible,  the  applicant 

74 Only permits related to the premises and not to the activity, such as food permits, are taken into account 
(i.e. planning permit, building permit, special retail authorisation, environmental permit). 
75 These deadlines concern a completion of formalities to obtain a planning and/or a building permit and/or a 
special retail authorisation. It does not include the environmental permit and refers only to situations when 
the project is in conformity with the local plans.  

35 

 
 
 
 
                                                            
may not be aware when the procedure officially starts. In Belgium, the legislation specifies that the 
deadline  is  counted  from  the  moment  when  the  application  file  is  deemed  complete  and  it  also 
imposes on the authority a deadline to inform the applicant of the completeness of the file. This is 
however not common in other Member States. 

In  addition  to  the  burden  for  the  applicant,  the  lack  of  transparency  can  also  generate  additional 
burden to the authorities as insufficiently informed applicants are likely to submit incomplete files.  
Hence,  it  is  important  to  ensure  that  all  the  necessary  information  about  the  establishment 
procedure is made available to the applicant beforehand.  

As indicated above, Articles 5 to 8 of the Services Directive provide for administrative simplification 
and cooperation. Member States are required to simplify administrative procedures, to set up Points 
of  single  contact,  to  provide  for  the  possibility  to  complete  procedures  at  a  distance  and  by 
electronic  means  and  to  make  information  on  national  requirements  and  procedures  easily 
accessible.  In  addition,  Member  States  must  comply  with  the  specific  obligations  provided  for  in 
Regulation  (EU)  No  910/2014  of  the  European  Parliament  and  of  the  Council.76  This  includes 
obligations related to the use and acceptance of certain types of electronic signatures, recognition of 
advanced  electronic  signatures  and  advanced  electronic  signatures  based  on  qualified  certificates, 
provided  for  in  Article  27  of  that  Regulation  and  further  specified  in  Commission  Implementing 
Decision (EU) 2015/1506.77 As emphasized in the responses to the open public consultation, the use 
of  electronic  procedures  should  improve  transparency  through  easier  access  to  the  relevant 
documents,  to  information,  to  the  status  of  individual  applications.  On-line  submission  of 
applications would be particularly important for SMEs.  

Finally, it is also important that establishment decisions, positive or negative, are made public.  

The  information  below  focuses  on  this  aspect  ensuing  from  the  principles  of  legal  certainty,  good 
administration and transparency. 

Regulation in Member States 

Publication of both positive and negative decisions does not only comply with the principles of legal 
certainty  and  good  administration  in  the  ongoing  procedures,  but  also  allows  future  applicants  to 
better prepare for the procedure and assess the chances for a positive decision. 

More than half of Member States publish or display in public only positive decisions. In six Member 
States (Belgium, France, Greece, Lithuania, the Netherlands and Poland) both positive and negative 
decisions are published. In Cyprus and the Czech Republic access to decisions is possible only upon 
request  or  only  for  interested  parties.  A  number  of  countries  use  on-line  tools,  such  as  electronic 

76 Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic 
identification  and  trust  services  for  electronic  transactions  in  the  internal  market  and  repealing  Directive 
1999/93/EC (OJ L 257, 28.8.2014, p. 73). 
77 Commission Implementing Decision (EU) 2015/1506 of 8 September 2015 laying down specifications relating 
to  formats  of  advanced  electronic  signatures  and  advanced  seals  to  be  recognised  by  public  sector  bodies 
pursuant to Articles 27(5) and 37(5) of Regulation (EU) No 910/2014 of the European Parliament and of the 
Council on electronic identification and trust services for electronic transactions in the internal market (OJ L 
235, 9.9.2015, p. 37). 

36 

 
 
 
 
                                                            
registers, to make decisions available to the public. In Austria, Croatia, Germany, Slovenia and Spain 
neither positive nor negative decisions are published or publicly displayed.  

4.4.  Retail Restrictiveness Indicator: results for establishment 

restrictions 

The establishment pillar is part of the overall Retail Restrictiveness Indicator (RRI)  – the composite 
indicator developed by the Commission services and presented in section 3. It measures the level of 
restrictiveness of Member States. It is composed of the following elements: size thresholds, the level 
of  detail  in  local  plans,  the  existence  of  regulations  specific  to  location,  the  requirements  for 
economic  data,  the  number  of  permits  required,  the  number  of  entities  to  be  contacted  in  the 
process,  the  number  of  impact  assessments  required,  the  length  of  the  procedure  and  the 
publication  of  establishment  decisions.  Details  of  retail  establishment  restrictions  have  been 
presented in the previous sections of this document. 

As figure 16 presents, in the end of 201778, the strictest requirements to establish new shops can be 
observed  in  Italy,  Luxemburg  and  Cyprus.  This  stems  mainly  from  a  mixture  of  factors  linked  to 
conditions to establishment, mainly the size thresholds, the requirements for economic data and the 
legislation  specific  to  location.  The  burden  caused  by  procedural  issues  (the  number  of  permits, 
entities to contact, or the length of the procedure) also adds to the picture.  

In  the  least  restrictive  countries  –  Estonia,  Latvia  and  Slovakia  –  the  establishment  conditions  and 
procedures enable retailers to establish swiftly and within a rather short deadline. 

Figure 16: The retail establishment restrictions pillar of the RRI 

78 In some cases, when important changes took place after December 2017, the information has been updated 
and taken into account in the scores.  

37 

 
 
 
 
 
                                                            
Source: Own calculations based on information collected from Member States and through dedicated studies 

The restrictiveness level of retail establishment rules can have an impact on the functioning of the 
retail  sector  and  may  explain  its  suboptimal  performance  in  some  areas.  The  following  section 
assesses  the  potential  impact  of  restrictions  to  retail  establishment  on  competition,  market 
structure, productivity, employment, innovation and consumers. 

4.5.  Potential impacts of restrictions to retail establishment 

Restrictions  on  retail  establishment  can  have  inter  alia  the  effect  of  blocking  or  reducing  market 
entry and favouring incumbent companies. Although it is not easy to establish and measure a direct 
clear link between the restrictions to the establishment of new shops and the actual effects on the 
economic variables,  numerous  studies  have demonstrated negative  effects  of such barriers  on  the 
market  structure  and  unfettered  competition  as  well  as  indirect  negative  effects  on  productivity, 

38 

 
 
 
 
 
employment, prices and innovation. Those impacts are to a great extent confirmed by the present 
analysis. 

While  there  are  ways  to  assess  the  impacts  of  entry  restrictions  on  the  economic  efficiency,  it  is 
much  more  difficult  to  measure  whether  such  regulations  are  effective  in  achieving  the  legitimate 
public  policy  objectives  they  pursue.  Needless  to  say,  an  analysis  of  the  effectiveness  of  national 
measures  is  legally  relevant  only  for  those  measures  which  may  possibly  be  justified.  By  contrast, 
public measures such as those listed in article 14 Services Directive can never be justified because 
they either pursue purely economic objectives or they are by definition disproportionate.  

In  addition,  the  hitherto  approach  to  retail  establishment  regulations  gains  a  new  dimension  in 
today’s  increasingly  digitalised  retail  sector.  Since  establishment  restrictions  usually  concern  solely 
brick-and-mortar shops, they may cease to be effective in achieving their goals when market actors 
compete through e-commerce. Only a few Member States have responded to these developments 
adapting their legislation to account for the establishment of showrooms and pick-up points or are 
reflecting  on  doing  this  in  the  future.  Furthermore,  a  systematic  analysis  of  the  effects  of  current 
regulations in the changing retail landscape is lacking. 

4.5.1.  Potential impacts on competition 

Certain  proxies  are  used  to  measure  the  level  of  competition  in  a  given  market:  the  level  of 
concentration  of  companies  (in  terms  of  their  market  shares),  the  mark-ups  that  the  existing 
companies  apply,  or  the  birth  rate  and  the  churn  rate  of  retail  companies.  In  the  case  of  retail, 
competition  is  particularly  important  at  the  local  level  –  how  many  and  what  types  of  shops 
consumers  can  effectively  choose  from  in  their  catchment  area.  This  local  level  is  however  the 
hardest to measure, especially for the whole EU. 

Some regulations  will keep  certain companies  or  store  formats  away  from the market (e.g. if  they 
determine the admissible type or size of the outlet), others will dissuade certain market players from 
investing on the market due to likely difficulties in obtaining the necessary decisions.  They can also 
have a discriminatory effect on foreign companies if they target formats and sizes more commonly 
found abroad.  

Studies  have  shown  that  the  existence  of  such  regulations  increases  the  probability  of  high 
concentration79  and  creation  of  monopolies80.  It  strengthens  the  position  of  incumbents  inciting 
them to increase their mark-ups which in turn has a negative impact on economic performance. The 
analysis of changes in regulation between 1998 and 2007 in France and Italy concluded that barriers 
to entry were indeed associated to higher mark-ups.81  

79M.  Bertrand,  F.  Kramarz  (2004)  Does  entry  regulation  hinder  job  creation?  Evidence  from  the  French  retail 
industry. 
80 R. Griffith, H. Harmgat (2008) Supermarkets and planning regulation. 
81 F. Daveri, R. Lecat, M.L. Parisi (2011) Service deregulation, competition and the performance of French and 
Italian firms. 

39 

 
 
 
 
                                                            
Results of the present analysis indicate that less new retail companies enter the market in Member 
States  with  higher  establishment  restrictions.  Also,  in  those  countries,  fewer  companies  leave  the 
market, which in fact may indicate that less efficient companies manage to survive whereas in strong 
competition conditions they would probably be eliminated from the market. Figures 17 and 18 show 
that the birth rates and churn rates of such enterprises are negatively correlated with the level of all 
establishment restrictions analysed combined together.82 

Figures 17 and 18: Correlations between the level of restrictiveness of retail establishment and churn 
and birth rates of retail companies 

Source:  Own  analysis  based  on  information  from  the  retail  establishment  study,  the  Member  States  authorities,  and 
Eurostat 

The  links  revealed  by  the  correlation  analysis  have  been  confirmed  by  outcomes  of  a  regression 
analysis.83  Retail  establishment  restrictions,  in  particular  the  specific  requirements  linked  to  size 
thresholds,  seem  to  have  a  statistically  significant  negative  impact  on  the  birth  rates  of  retail 
companies, and a positive impact on the price level index (i.e. lead to higher prices, in particular for 
prices of food products). They also correlate in a positive direction with the gross operating rate of 
retail companies. 

82 Data for the RRI reflect the state of play for 2017. In some cases, when important changes took place after 
December 2017, the information has been updated and taken into account in the scores. The most recent data 
from Eurostat available at the time of the analysis is for 2015. 
83 Due to a small number of observations, this analysis has its statistical limitations. More details can be found 
in Annex 2 to this SWD. 

40 

 
 
 
 
  
 
 
 
 
 
                                                            
Figures 19, 20 and 21: Correlations between the specific requirements linked to size thresholds and 
birth rates of retail companies, the price level index and the gross operating rate. 

Source: Own analysis based on information from the retail establishment study, the Member States authorities, Eurostat 

In  more  detail,  in  addition  to  requirements  linked  to  size  thresholds,  certain  other  specific 
restrictions to retail establishment display a particular link with market developments. For example, 
the retail market is more concentrated in Member States with regulations specific to the location of 
a  retail  outlet  (in  particular  defining  rules  for  establishment  in  or  outside  city  centre).  Also,  the 
higher the number of market studies and impact assessments that the retailer needs to submit, the 
higher the gross operating rate of retail companies.84 In those more concentrated markets, prices for 
goods distributed in retail outlets also tend to be higher. 

84 This is an indicator of profitability that corresponds to the share of gross operating surplus in turnover. The 
gross operating surplus is the surplus generated by operating activities after the labour factor input has been 
deducted. It can be calculated from the value-added at factor cost less the personnel costs.  Turnover is the 
total of all sales (excluding VAT) of goods and services carried out by the enterprise of a given sector during the 
reference period;  http://ec.europa.eu/eurostat/web/products-datasets/-/tin00155.  

41 

 
 
  
   
 
 
                                                            
Links between the number of permits required and regulation specific to the location on one side, 
and competition on the other side, have been confirmed by the outcomes of the economic analysis 
carried out in the frame of the study on retail establishment restrictions.85 Higher number of permits 
seemed to be correlated  with higher retailers' margins (the gross operating rates) and with higher 
concentration  in  the  market  (measured  as  CR586  and  HHI87).  The  study  also  identified  a  negative 
relationship between the entry rate and market concentration. 

In  any  sense,  restrictions  concerning  establishment  of  physical  shops  affect  almost  solely  off-line 
retailers,  which  does  not  help  them  compete  with  ever  stronger  on-line  traders.  However,  in  the 
increasingly  multi-channel  retail,  these  restrictions  also  affect  pure  on-line  retailers  wishing  to 
establish their physical presence. 

4.5.2.  Potential impacts on market structure 

Competition  is  also  linked  with  the  structure  of  the  market  and  its  dynamics.  Establishment 
restrictions can influence the type and the size of firms, the types of store formats that those firms 
operate (such as hypermarkets, supermarkets, discounters, convenience stores, small independent 
shops, etc.), the development of the different formats and of the selling space in general, as well as 
the development of on-line sales. 

Analyses  have  concluded  that  regulations  on  size  and  location  of  shops  had  a  real  effect  on 
companies’  decisions.  In  Spain  the  analysis  taking  into  account  regional  differences  in  retail 
establishment  regulation  showed  that  such  regulations  indeed  impeded  the  entry  of  larger  store 
formats.88  In  England89,  the  number  of  applications  for  major  new  retail  developments  fell 
significantly after the government introduced additional constraints on the opening of large stores in 
suburban areas in the mid-nineties and the store sizes decreased.90  

Even if such regulations do not prevent market entry as such, they may influence retailer’s decision 
on the location of the store, its size, format and assortment. This may hamper the firm’s ability to 
adjust to consumers’ preferences and to successfully compete on the market. However, regulations 
may affect market players differently depending on their business model. For example, grocery retail 
chains  offering  different  store  formats  (e.g.  hypermarkets,  supermarkets  as  well  as  convenience 
stores)  can  more  easily  adapt  to  existing  restrictions  than  non-food  stores  running  a  single  store 

of 

for 

the 

out 

and 

carried 

85  Holland  van  Gijzen  Advocaten  (2016)  Legal  study  on  retail  establishment  through  the  28  Member  States: 
Restrictions 
Commission; 
establishment 
freedom 
http://ec.europa.eu/DocsRoom/documents/16127. 
86 CR5 is a sum of market shares of the five largest retail companies in a Member State. 
87  The  Herfindahl-Hirschman  index  (HHI)  is  a  commonly  accepted  measure  of  market  concentration.  It  is 
calculated by squaring the market share of each firm competing in a market, and then summing the resulting 
numbers, and can range from close to zero to 10,000. 
88  L.  Orea  (2012)  Entry  deterrence  through  regional  regulation  and  strict  licensing  policy:  An  analysis  of  the 
large retail establishments in Spain. 
89 As compared to Scottland and Northern Ireland where the regulation was less stringently implemented. 
90 P. Cheshire, C. Hilber, I. Kaplanis (2011) Evaluating the Effects of Planning Policies on the Retail Sector: Or do 
Town Centre First Policies Deliver the Goods? 

European 

42 

 
 
 
 
 
                                                            
format.  The  effect  of  entry  deterrence  will  hence  be  weaker  on  companies  running  diverse  store   
formats91. 

Results of a regression analysis92 show a negative impact of establishment restrictions (in particular, 
the specific requirements linked to size thresholds, requirements for economic data and the number 
of  permits)  on  the  growth  of  the  number  of  outlets  for  supermarkets  and  on  the  growth  of  this 
format's selling space. In addition, a correlation analysis (some results presented in figure 22) shows 
a negative link between restrictions to establishment and the growth of the number of outlets and 
of  the  selling  space  of  most  store  formats:  supermarkets,  hypermarkets  and  non-grocery  stores. 
However, no strong link could be found between those restrictions and changes in the selling space 
and the number of traditional shops93, which would indicate that traditional retailers do not  really 
benefit  from  such measures  (even  though the restrictions  have often been put in place to  protect 
them  against  the  competition  of  larger  shops).  In  general,  retailers  in  more  restrictive  Member 
States opened in the years analysed not only less shops but also smaller premises  – often limiting 
the accessibility and choice for consumers.  

Figure 22: Correlation between the level of restrictiveness of retail establishment and the growth in 
the selling space and the number of supermarket and hypermarket outlets 

Source:  Own  analysis  based  on  information  from  the  retail  establishment  study,  the  Member  States  authorities,  and 
Euromonitor data 

This  negative  link  is  confirmed  by  results  of  a  regression  analysis,  which  also  shows  a  statistically 
significant negative impact of retail establishment restrictions on the development of supermarkets. 

91 A. Pozzi, F. Schivardi (2015) Entry regulation in retail markets. 
92 Data for the RRI reflect the state of play for 2017. In some cases, when important changes took place after 
December 2017, the information has been updated and taken into account in the scores. The most recent data 
from Eurostat available at the time of the analysis is for 2015. 
93 The only (rather weak) correlation found was a negative link between the number of entities to be contacted 
and the growth of the selling space and number of traditional shops. 

43 

 
 
  
  
 
                                                            
A  different  pattern  could  however  be  observed  for  discount  stores:  their  number  and  the  selling 
space  grows  more  in  countries  where  the  level  of  establishment  restrictions  is  higher.  A  possible 
explanation  can  be  the  generally  very  dynamic  development  of  this  format,  which  results  from  a 
more  and  more  frequent  consumer  orientation  towards  lower  prices  and  the  improving  quality  of 
the discounters' offer. These shops are also rather flexible in terms of location compared to other 
formats,  in  particular  supermarkets  and  hypermarkets,  as  their  limited  range  of  goods  on  offer 
requires  less  selling  space.  In  many  cases,  they  may  also  replace  convenience  stores,  taking  over 
their  role  of  neighbourhood  shops.  High  specific  requirements  linked  to  size  thresholds  seem  to 
particularly positively impact the growth of the selling space of discounters. 

The above patterns have been confirmed by results of the economic analysis carried out in the frame 
of the study on retail establishment restrictions.94 In countries where more permits and numerous 
impact  assessments  and  studies  were  required  from  retailers,  less  outlets  were  opened  and  less 
selling space was created. Also the number of entities that retailers have to contact when they apply 
for an authorisation or a permit is negatively correlated with the dynamics of new stores creation, in 
particular for small outlets. 

The study also showed that specific requirements referring to the size thresholds for shops seem to 
negatively (and significantly) impact the market dynamics, in particular for supermarkets.  Actually, 
such  requirements  had  the  greatest  impact  on  the  creation  of  new  stores  from  all  the  different 
regulatory aspects analysed, followed by the number of entities to be contacted and the number of 
impact assessments to provide. The study concludes that establishment restrictions not only have an 
impact on the development of new shops, but they also affect different store formats differently. 

4.5.3.  Potential impact on productivity 

Entry  regulation  can  affect  productivity  by  limiting  competition  and  decreasing  the  incentives  of 
incumbent firms to become more efficient.  

As  restrictive  regulations  often  influence  shop  sizes  and  their  location,  they  can  also  limit  the 
company’s ability to choose the most efficient store format for a particular location.95  

A company may also not be able to establish all the desired formats and achieve economies of scale, 
which are  important for  productivity gains. Achieving scale  through store  format  is  a  key driver  of 
retail performance. Large formats are generally more productive than small formats and specialized 
formats (e.g. discounters) are more productive than general formats.96  

of 

and 

94  Holland  van  Gijzen  Advocaten  (2016)  Legal  study  on  retail  establishment  through  the  28  Member  States: 
Restrictions 
Commission; 
establishment 
freedom 
http://ec.europa.eu/DocsRoom/documents/16127. 
95  Holland  van  Gijzen  Advocaten  (2016)  Legal  study  on  retail  establishment  through  the  28  Member  States: 
Restrictions 
Commission, 
establishment 
freedom 
http://ec.europa.eu/DocsRoom/documents/16127. 
96 Mc Kinsey (2010) Creating Economic Growth In Denmark Through Competition. 

European 

European 

carried 

carried 

and 

out 

out 

the 

the 

for 

for 

of 

44 

 
 
 
 
                                                            
Studies  have shown  that establishment  restrictions  in  retail are  associated with lower  productivity 
and that reforms can improve sector’s performance in that respect. Retail reform in Sweden in the 
1990s (i.e. easing establishment restrictions and leading to growth of large-scale format stores) led 
to the highest retail productivity growth compared to US and Europe.97  Productivity growth in the 
food retail sector in the UK between 1997 and 2003, measured on the level of retail chains, would 
have  been  0.44%  per  year  in  the  absence  of  regulation,  whereas  the  observed  growth  was  only 
0.07%.98  Another  study  using  the  differences  in  restrictiveness  of  planning  policies  between  local 
authorities across the UK found that the introduction of stricter zoning regulation directly reduced 
productivity both by reducing shop size and by forcing retail onto less productive sites.99 Adopting 
best  practice  regulation  as  measured  by  the  OECD  in  France  and  Italy  could  increase  long-run 
productivity  by  3.5  per  cent  in  France  and  3  per  cent  in  Italy.100  In  Denmark,  planning  restrictions 
which  effectively  banned  the  entry  of  hypermarkets  have  shaped  the  market  structure  with  many 
smaller and less efficient shops and led to a large productivity gap in the retail sector as compared to 
peer  countries.101  A  recent  reform  relaxed  to  some  extent  the  retail  establishment  rules,  which  is 
expected to increase productivity by 0.9% in the long run.102 

A recent Commission analysis showed that there  is a link between the restrictiveness in retail and 
labour  productivity.  In  Member  States  with  less  restrictive  retail  regulations  (measured  with  the 
OECD Product Market Regulations Index) the (wage-adjusted) labour productivity is lower.103  

In  addition,  having  to  apply  to  numerous  public  entities  and  to  provide  certain  studies  or  data  in 
order  to  obtain  several  different  decisions  (authorisations,  permits  and  licences)  puts  a  significant 
burden  on  retailers.  In  particular,  small  companies  can  find  it  difficult  to  comply  with  such 
requirements.  

4.5.4.  Potential impact on employment 

Establishment  regulations  can  hamper  job-creation  simply  by  restricting  the  access  of  new  market 
players. Increased competition however can lead to the exit of less efficient firms or to incumbents 
striving  for  efficiency  gains  through  workforce  cuts.  The  job-creation  effect  through  increased 
market  entry  is  therefore  not  obvious.  On  the  other  hand,  competition  could  reduce  incumbents’ 
mark-ups, pushing them to selling more in volume and therefore requiring more workforce.104  

97 Ibid. 
98 Cheshire et al. (2011) Evaluating the Effects of Planning Policies on the Retail Sector: Or do Town Centre First 
Policies Deliver the Goods? 
99 Spatial Economics Research Centre at the London School of Economics as quoted in Cheshire et al. (2011). 
100 Daveri et al. (2011) Service deregulation, competition and the performance of French and Italian firms. 
101 Danish Competition Authority (2012) The Danish grocery market.  
102 Ministry of Finance, Denmark (2016) Effekt ved aftale om planloven.  
103 European Commission DG Internal Market, Industry, Entrepreneurship and SMEs,  Background documents 
for the European Semester (2018) The EU retail sector.  
104 A. Pozzi, F. Schivardi (2015) Entry regulation in retail markets. 

45 

 
 
 
 
                                                            
Studies have shown that establishment restrictions have a strong negative effect on employment in 
the sector. In France, the analysis of the impact of the Loi Royer105 concluded that the measures put 
in place have reduced employment in the retail sector by at least 3%.106 Additional barriers imposed 
by the Loi Raffarin107 have been estimated to cause a 6% increase in supermarkets’ costs,108 which in 
turn  could  have  also  led  to  the  reduction  in  employment.  The  analysis  of  the  effects  of  the 
regulatory  reform of  1998  in Italy109  showed  that it  had  a  clear  impact on  the  performance  of  the 
sector, increasing prices and labour costs while reducing productivity and employment.110  

4.5.5.  Potential impact on innovation 

Increased  competition  can  incite  market  players  to  look  for  solutions  to  increase  their  efficiency. 
Investment in ICT leading to the optimisation of processes, such as intelligent stock management or 
self-service check-outs for customers can be an important factor improving productivity. Given that 
fixed costs of such investments can be relatively large for small store formats, restrictions on shop 
sizes are likely to inhibit innovation.  

The  literature  on  this  subject  advocates  that  in  the  case  of  retail,  innovation  in  processes  (as 
opposed to product innovation) is the main determinant of productivity growth. Studies measuring 
the impact of regulations on innovation found a negative correlation between barriers to entry and 
innovation,  measured  through  investment  in  ICT.111  Removing  entry  restrictions  is  hence  likely  to 
increase  investment  in  ICT.  Also,  the  present  analysis  shows  that  the  higher  the  establishment 
restrictions, the lower the investment rate of retail companies – figure 23. 112 However, other studies 
have  shown  that  competition  fosters  innovation  only  up  to  a  certain  point  where  benefits  from 
catching-up still exceed the decreasing profits caused by increased competition.113 

Figure 23: Correlation between the level of restrictiveness of retail establishment and the investment 
rate in retail 

105 Legislation passed in France in 1973, which limited the physical size of certain businesses, for example, it 
introduced a special permit for businesses > 1000 m² in towns with less than 40 000 inhabitants. 
106 M. Bertrand, F. Kramarz (2004) Does entry regulation hinder job creation? Evidence from the French retail 
industry. 
107 Legislation introduced in France in 1996, which strengthened the provisions of the Loi Royer by lowering 
the size threshold to 300 m². 
108 S. Jódar (2009) Asymmetric entry regulations: Evidence for the French retail industry, Jornadas de Economía 
Industrial as quoted in J. Asensio (2012) Regional retail regulation and supermarket entry in Spain.  
109 The regulation introduced maximum floor space allowed per province.  
110 F. Schivardi and E. Viviano (2010) Barriers in retail trade. 
111 F. Schivardi and E. Viviano (2010) Barriers in retail trade. 
112 Data for the RRI reflect the state of play for 2017. In some cases, when important changes took place after 
December 2017, the information has been updated and taken into account in the scores. The most recent data 
from Eurostat available at the time of the analysis is for 2015. 
113 Daveri et al. (2011) Service deregulation, competition and the performance of French and Italian firms. 

46 

 
 
 
 
                                                            
Source:  Own  analysis  based  on  information  from  the  retail  establishment  study,  the  Member  States  authorities,  and 
Euromonitor data 

4.5.6.  Potential impact on consumers 

Consumers  can  benefit  from  increased  competition  through  lower  prices  and  a  greater  variety  of 
products and store formats in the market. Establishment restrictions that are often put in place to 
protect  consumers'  accessibility  to  retail  in  both  urban  and  rural  areas  can  in  fact  reduce 
affordability and choice of products for consumers. 

Prices 

As already highlighted, entry restrictions are likely to increase mark-ups of incumbent firms and thus 
lead to higher consumer prices.   

Numerous  studies  have  found  that  removing  establishment  barriers  could  decrease  prices.  The 
already  quoted  study  analysing  the  effects  of  the  French  reform  in  mid-nineties  (Loi  Raffarin) 
showed  that  stronger  entry  deterrence  increases  both  concentration  and  prices.114  Also  the  study 
analysing  local  variation  in  entry  regulation  in  Italian  provinces  found  that  barriers  exert  a  strong 
influence on performance, increasing profit margins and prices. There, stricter entry regulation has 
been found to increase prices.115 

Finally, the present analysis reveals that retail establishment restrictions have not only a statistically 
significant negative impact on the birth and churn rates of retail companies, but also link to higher 
prices – figure 24. 116 

114 M. Bertrand, F. Kramarz (2004) Does entry regulation hinder job creation? Evidence from the French retail 
industry. 
115 F. Schivardi, E. Viviano (2010) Barriers in retail trade. 
116 Data for the RRI reflect the state of play for 2017. In some cases, when important changes took place after 
December 2017, the information has been updated and taken into account in the scores. The most recent data 
from Eurostat available at the time of the analysis is for 2015.  

47 

 
 
 
 
 
 
                                                            
Figure  24:  Correlation  between  the  level  of  restrictiveness  of  retail  establishment  and  the  level  of 
prices for food and non-alcoholic beverages 

Source:  Own  analysis  based  on  information  from  the  retail  establishment  study,  the  Member  States  authorities  and 
Eurostat 

Choice of shops and products 

Consumers can also benefit from increased competition through increased variety in products and 
store formats offered on the market. Reducing establishment restrictions allow the entry of different 
store  formats  appealing  to  consumers,  and  the  increased  competitive  pressure  also  inclines 
incumbents to increase and differentiate their product offer.117 

A ban on establishment of shops because of their size would deprive retailers from the possibility to 
choose  the  format  which  would  best  suit  the  area,  the  population  and  the  business  model  of  the 
retailer.  A  more  complex  and  burdensome  procedure  to  obtain  an  authorisation  or  a  permit  to 
establish a large shop may discourage operators from building such premises or make it more costly. 
Hence, consumers cannot enjoy a larger variety of shops and products. 

Limitations as to the location of new shops may also lead to inefficiencies in the market. City centres 
are  often  not  suited  for  large  shops  and  if  they  are  not  allowed  to  establish  in  the  outskirts, 
consumers will simply not be able to enjoy them at all. Consumers may then be faced with higher 
prices  and  a  limited  offer.  In  addition,  such  restrictions  to  location  are  becoming  less  effective  in 
times  of  growing  competition  coming  from  on-line  sales.  Also,  this  may  not  be  beneficial  for 
independent retailers either, as they would have difficulties to compete with small formats run by 
large retail chains. 

117  EY,  Cambridge  Econometrics,  Arcadia  International  for  the  European  Commission  (2014)  The  economic 
impact of modern retail on choice and innovation in the EU food sector 
http://ec.europa.eu/competition/sectors/agriculture/retail_study_report_en.pdf.   

48 

 
 
 
 
 
 
                                                            
5.  Operational restrictions 

5.1.  Introduction  

On  top  of  regulations  affecting  the  establishment  of  retail  outlets,  retailers  have  to  deal  with  a 
number  of  regulations  linked  to  their  daily  operations  -  so  called  operational  restrictions.  Such 
regulations  sometimes  become  a  significant  burden  for  businesses,  affecting  in  particular  their 
efficiency,  productivity  and  the  quality  and  price  of  goods/services  offered.  Moreover,  excessively 
restrictive or complex regulations can deter or make market entry more burdensome or even induce 
exit from the market.  

This analysis follows the paths of the OECD which, since 1998, has been assessing the restrictiveness 
of operational regulations governing retail companies in the PMR indicator referred to in section 3. 
The elements taken on-board in this analysis are very similar to those used by the OECD. However, 
they are not strictly identical and go further than the OECD's to try to better capture the complexity 
and diversity of the regulatory frameworks in place in the Member States.  

As  already  indicated,  this  document  examines  retail-specific  regulations.  With  the  exception  of 
territorial supply constraints, the focus is on regulations put in place by competent authorities and 
not restrictions created by the behaviour of private operators. 

The operational restrictions examined in this context are: 

  Shop opening hours 
  Product-specific sales restrictions 
  Sales, promotions and discounts 
  Retail-specific taxes and fees 
  Sourcing, including issues linked to territorial supply constraints 
  Contractual practices of modern retail 

The  information  presented  reflects  the  state  of  play  for  the  end  of  2017.118  In  some  cases,  when 
important  changes  took  place  after  December  2017,  the  information  has  been  updated  and  taken 
into account. 

5.2.   Shop opening hours  

In  addition  to  the  location  and  shop  size,  shop  opening  hours  are  an  important  factor  influencing 
consumers'  accessibility  to  a  retail  outlet.119  Social  and  cultural  changes  of  living  and  working 
conditions, in particular in large urban areas, influence consumers’ shopping patterns. Due to long 

118 Information was collected through dedicated studies and from Member States. 
119 Report of the European Commission of 5 July 2010 Retail market monitoring report: Towards more efficient 
and fairer retail services in the internal market for 2020, COM(2010)355 final. 

49 

 
 
 
 
 
 
                                                            
working  hours  late-night  and  Sunday  shopping  have  become  increasingly  attractive  to  many 
households.  

Moreover,  e-commerce  is  dramatically  changing  consumers'  shopping  habits.  The  most  important 
change  is  that  consumers  can  shop  anytime  and  anywhere  as  opening  hours  restrictions  do  not 
apply  to  on-line  trade.  This  puts  brick-and-mortar  retailers  under  pressure  to  keep  up  with 
competition.  

Regulation in Member States 

Regulations  of  shop  opening  hours  vary  significantly  between  Member  States.  In  twelve  Member 
States shop  opening  hours are unrestricted. In four  Member States retailers can choose freely the 
opening hours except on specific public holidays. Four Member States regulate only Sunday opening 
hours. Eight Member States have extensive rules regulating opening hours on weekdays, Saturdays 
and Sundays. 

 Figure 25: Shop opening hours regulation in Member States 

  No  restrictions  on  shop  opening  hours  (Bulgaria, 
Italy,  Latvia, 

Ireland, 

Croatia,  Estonia,  Finland,  Hungary, 
Lithuania, Portugal, Slovenia, Sweden). 

 No restrictions, but in principle shops have to remain 
closed  on  some  public  holidays  (Czech  Republic,  Denmark, 
Romania*, Slovakia). 

  Regulation  of  Sunday  opening  hours  (France, 

Germany, Poland and the United Kingdom).  

 Regulation of weekly, Saturday and Sunday opening 

hours (Austria, Belgium, Cyprus, Greece, Luxembourg, 
Malta**, the Netherlands, Spain). 
* In Romania public holidays in the retail sector are set out in 
the labour legislation 
** In Malta opening hours differ between periods of the year, 
i.e. different rules apply to the period between 8 January and 
31  October  and  to  the  period  between  1  November  and  7 
January. 

Source: information collected from Member States and through dedicated studies 

The regulatory situation has been changing over the past decades and in recent years there has been 
a trend in Member States towards reviewing the existing legislation on shop opening hours making 
the rules more flexible.  Recent reforms took place in Denmark (liberalisation of Sunday trading in 
2012),  Finland  (complete  liberalisation  in 2016),  France  (increased  number  of  shopping Sundays  in 
2015),  Greece  (increased  number  of  shopping  Sundays  in  2013),  Italy  (complete  liberalisation  in 
2011),  the  Netherlands  (broadening  of  the  powers  of  the  Dutch  municipalities  to  authorize 
exemptions from the prohibition to open shops on Sundays and several holidays in 2013), Portugal 

50 

 
 
 
 
 
 
 
(complete liberalisation in 2015) and Spain (increased number of weekly trading hours and shopping 
Sundays in 2012 and 2014)120.  

While  most  Member  States  review  their  regulations  to  make  them  more  flexible,  few  countries 
introduced recently certain limitations. The Czech Republic has introduced in 2016 a prohibition to 
trade on a number of public holidays.121  In Hungary the prohibition of Sunday trading introduced in 
2015 was repealed in 2016. In Poland the recent regulation will gradually prohibit Sunday trading as 
of 2018.122  

Regulation of weekday and Saturday shop opening hours 

The  weekly  and  Saturday  opening  hours'  regulation  usually  specifies  the  time  span  during  the  day 
when  shops  are  allowed  to  operate.  Such  regulations  can  be  found  in  Austria,  Belgium,  Cyprus, 
Greece,  Luxembourg,  Malta,  the  Netherlands  and  Spain.  The  allowed  time  span  is  usually  quite 
broad, enabling shops to open from 5 or 6 a.m. to 8 or 9 p.m. Time limits are in some cases more 
restrictive on Saturdays, e.g. in Austria shops should close by 6 p.m. and in Luxembourg by 7 p.m. on 
that day. In Spain the regulation specifies in addition the  minimum number of hours shops should 
stay  open  during the  whole week.  The  Autonomous  Communities  are  free  to  determine  the  exact 
trading hours as long as they do not go below the minimum of 90 hours per week established by the 
Spanish legislation. 

Regulation of Sunday shop opening hours 

Sunday  opening  hours  are  regulated  in  Austria,  Belgium,  Cyprus,  France,  Germany,  Greece, 
Luxembourg, Malta, the Netherlands, Poland, Spain and the United Kingdom.  

Three types of regulation can be distinguished123: 

-  Trading  allowed  on  all  Sundays,  but  with  some  limitations  on  the  opening  times  applying  either 
only  to  shops  of  certain  size  or  assortment  (France,  the  United  Kingdom)  or  to  all  shops 
(Luxembourg).  

In the UK  Sunday  operations  of  small shops  (up  to  280m2) are  unrestricted.  Shops  above  this  size 
threshold are allowed to trade, but only for five to six hours. This applies to all stores regardless of 
the assortment sold.124 In France the rules depend on assortment. Food shops are allowed to stay 
open  on  Sundays,  but  not  beyond  1  pm.  Finally,  in  Luxembourg  all  shops  are  allowed  to  trade  on 
Sundays regardless of their size and the type of products sold, but only from 6 am to 1 pm. 

120 The reform on the level of the central government sets minimum regulatory requirements. Building on this, 
the Autonomous Communities have the competence to adopt more specific rules on shop opening hours. 
121 With the exception i.a. of shops up to 200m2. 
122 It does not concern i.a. shops which do not employ any staff, i.e. run by the owners themselves.   
123 Some countries can be classified in more than one category, given that regulation differs depending on the 
type of shop. 
124 The regulation, with some variations, applies in England, Wales and Northern Ireland, while shop opening 
hours are unrestricted in Scotland. 

51 

 
 
                                                            
- Trading allowed only on a limited number of Sundays a year (Belgium – max. 15 Sundays,125 France 
– 12 Sundays,126 Greece – 8 Sundays, Spain - 10 Sundays on average, the regulation differs between 
Autonomous Communities).  

- Trading generally prohibited on Sundays with a possibility for local authorities to grant exceptions 
for specific areas or in specific circumstances (Austria, Germany, the Netherlands and Poland127). 

Special regime for particular types of shops and particular locations  

Most  Member  States  restricting shop opening  hours  put in place a  more  flexible  regime  for  shops 
offering certain daily consumer goods, some particular assortment or located in specific areas and 
places.  

Particular types of shops and particular locations 

In  most  Member  States  where  shop  opening  hours  are  restricted  shops  meeting  certain  daily 
consumer needs (such as bakers or newspaper agents) or particular needs (e.g. florists) are allowed 
to stay open on Sundays even if the general framework prohibits Sunday openings. The same applies 
to  shops  in  particular  locations  serving  tourists  and  travellers  (petrol  stations,  train  stations  and 
airports).  In  addition,  some  Member  States  allow  Sunday  opening  of  shops  selling  certain 
assortment, such as for example furniture, DIY or gardening products.128 

In a few Member States such special regime may concern all small shops provided certain conditions 
are  fulfilled.  In  Spain  where  Sunday  trading  is  in  principle  only  allowed  on  a  limited  number  of 
Sundays, small shops up to 300m2 are allowed to open without any restrictions. Also in Greece local 
authorities may allow independent shops under 250m2 (including franchisees, but excluding shops in 
commercial centres) to open on Sundays.  

Tourist areas 

In  many  Member  States  tourist  areas  benefit  from  a  more  flexible  regime  or  are  fully  or  partially 
exempted from the regulation applicable  to  the whole country, in which case the local authorities 
decide  on  the  opening  times.  Typically  the  regulations  applying  to  these  areas  allow  for  longer 
opening  hours  in  the  evening  during  the  week  and  more  possibilities  to  trade  on  Sundays.  Special 
regimes for tourist areas exist e.g. in France and in Spain and Belgium. In Austria and Greece local 
authorities can grant exemptions for tourist areas from the general shop opening hours regime. 

Other types of regulation of shop opening hours 

Obligatory closure on public holidays 

125 In Belgium retailers can also choose to trade on Sundays if they choose another 24h period during the week 
when their shop will remain closed. 
126 For non-food shops. 
127 In Poland the recently adopted legislation will restrict Sunday trading gradually as of 2018, allowing shops 
to stay open two Sundays a month in the first phase of implementation (2018), one Sunday a month in the 
second phase (2019) and finally fully restricting Sunday trading as of 2020. 
128 In the case of France it is a derogation from the principle of Sunday rest enshrined in the labour legislation. 

52 

 
 
                                                            
Some  Member  States,  despite  the  legislative  framework  which  in  principle  does  not  restrict  shop 
opening hours, impose a closure on a number of public holidays. This is the case for example in the 
Czech  Republic,  Denmark,  Romania  and  Slovakia.  In  Slovakia  however  this  obligation  does  not 
concern  the  self-employed,  in  the  Czech  Republic  small  shops  (below  200m2)  and  in    Denmark 
certain  types  of  shops,  i.e.  shops  selling  bread,  diary,  shops  in  airports,  railway  and  bus  stations, 
smaller shops with low turnover and retail shops in the country side. 

Regulation of shop opening hours for particular goods 

In some Member States regulations may concern the sale of alcohol for public health reasons and be 
restricted  to  particular  days  and  hours.  This  is  the  case  in  Estonia,  Finland,  Hungary,  Latvia  and 
Ireland.  In  Finland  for  example  alcohol  cannot  be  sold  during  the  night,  on  Sundays  and  public 
holidays. 

Rules set at local level 

In  some  Member  States  local  authorities  may  play  a  role  in  determining  the  applicable  rules.  For 
example  in  the  Netherlands  and  Slovakia  it  is  up  to  the  municipalities  to  decide  on  regulations 
applying  on  their  territory.  Some  Member  States  foresee  also  that  shop  opening  hours  can  be 
subject  to  ad-hoc  decisions  of  local  authorities  which  can  authorise  e.g.  Sunday  openings  not 
provided for in the relevant legislation.  

Shop opening hours and labour legislation 

Shop  opening  hours  may  also  be  indirectly  impacted  by  national  labour  legislation  which  would 
specify e.g. the maximum number of working hours per day, the time off that has to be granted to 
an employee and the additional remuneration for atypical working hours. For example in France the 
legislation foresees in principle Sunday rest for employees from which derogations are possible but 
linked to increased remuneration. Such legislation affects the costs incurred by businesses operating 
outside the typical working hours.  

Shop opening hours and e-commerce 

While  shop  opening  hours  regulation  applies  typically  only  to  physical  shops,  it  can  influence  e-
commerce by regulating the opening times of pick-up points for goods ordered on-line or the hours 
when orders are processed. However, in most Member States the legislation does not state explicitly 
whether  certain  rules  apply  to  e-commerce  or  not  which  may  cause  uncertainty  about  the 
applicability  of  the  rules.129  As  far  as  on-line  orders  are  concerned,  none  of  the  Member  States 
currently  restricts  their  availability  unless  it  concerns  the  pick-up  of  specific  products  the  sale  of 
which is restricted to particular hours, e.g. alcohol in Ireland. However, the Sunday closing regulation 
repealed recently in Hungary restricted the processing of on-line orders on that day.  

129  The  Czech  Trade  Inspection  Authority  has  been  investigating  if  the  fact  of  keeping  e-commerce  pick-up 
premises  open  on  a  public  holiday  when  trading  is  normally  prohibited  constitutes  a  breach  of  the  shop 
opening hours legislation as mentioned in as quoted in LE Europe, Spark Legal Network and Consultancy, VVA 
Consulting (2018) Operational restrictions in the retail sector, study carried out for the European Commission. 

53 

 
 
                                                            
Public policy objectives pursued by Member States 

Member States regulating shop opening hours put forward various public policy objectives to justify 
the  legal  framework  in  place.  Most  often  these  relate  with  the  need  to  balance  the  interests  of 
consumers  and  of  those  who  work  in  retail.  Some  Member  States  have  also  referred  to  the  fair 
competition  between  businesses.  As  shown  above,  in  several  countries  there  are  special  rules  for 
SMEs.  

Non-regulatory measures influencing shop opening hours  

In  practice  opening  hours  may  also  be  subject  to  collective  agreements  between  employers  and 
employees,  agreements  made  by  retailers  within  a  sectoral  association  or  restrictions  in  lease 
contracts  which  concern  in  particular  shops  in  shopping  centres  obliged  to  abide  by  the  opening 
times  determined  for  the  whole  entity.  These  may  lead  to  shorter  opening  hours  than  those  laid 
down in the legislation. 

Economic impact 

Effects on the performance of the sector 

Numerous studies have analysed the impact of the deregulation of shop opening hours on economic 
performance, most often in terms of the retail sector's employment and GDP. Many such analyses 
have been performed by the Member States who had carried out or were considering reforms in this 
field. 

In the 1990s analysis of the effects of past reforms and impact assessments of planned measures in 
Germany, Sweden and the Netherlands showed that the liberalisation of shop opening had positive 
economic effects on the functioning of the sector.  

A  1991  study  found  that  the  1974  reform  in  Sweden  had  led  to  an  increase  of  turnover  (by  5%), 
profits (by 3.6%) and the decrease in prices (by 0.6%).130   

A  Dutch  study  from  1995  measured  the  possible  impact  of  the  planned  reform  concluding  that  it 
would lead to the creation of 15 000 new jobs in the Netherlands (11 000 full time equivalent).131  

Another  study  the  same  year  in  Germany  found  that  the  liberalisation  would  lead  to  an  average 
increase in turnover of 2-3% over a three-year period.132 However only big shops would benefit from 
the change with a significant increase in turnover (5-7%), while small shops would face a decline (1-
2%).  

130 Civildepartement, Sweden (1991) Betänkande av 1989 ärs äffarstidsutredning  as quoted in D. Pilat (1997) 
Regulation and performance in the distribution sector, OECD Economic Department Working Papers No. 180. 
131 Centraal Planbureau (CPB), the Netherlands (1995) Economische effecten van liberalisering van winkeltijden 
in Nederland, Working Paper No. 74 as quoted in D. Pilat (1997) Regulation and performance in the distribution 
sector, OECD Economic Department Working Papers No. 180. 
132 Ifo Institute (1995) Überprüfung des Ladenschlussgesetzes vor dem Hintergrund der Erfahrungen im In- und 
Ausland - Zusammenfassung der Untersuchungsergebnisse des Ifo Institute, Ifo Schnelldienst, 
Vol. 48, 24/1995, pp. 11-25 as quoted in  D. Pilat (1997) Regulation and performance in the distribution sector, 
OECD Economic Department Working Papers No. 180. 

54 

 
 
 
                                                            
More recently the impact of shop opening hours’ reforms has been looked at in France, Germany, in 
the Netherlands and in Spain. 

In France the Loi Macron enlarged the  scope of tourist areas where shop opening hours are more 
flexible and introduced a possibility to trade on up to 12 Sundays per year instead of 5. The reform 
was  estimated  to  bring  gains  in  turnover  of  retail  sub-sectors  such  as  DIY,  Furniture,  sport  and 
garden equipment of €1.2 bn (+/- 20% increase) and 5100 new jobs (+/- 20% increase).133. The OECD 
estimated  its  impact  in  terms  of  GDP  to  0.08%  in  a  five-year  perspective  and  0.13%  in  a  ten-year 
perspective134. 

In  Germany,  a  2014  study  analysing  a  posteriori  the  effects  of  the  2006  deregulation  found  that 
relaxing  restrictions  on  business  hours 
increased  employment  by  0.4  workers  per  shop 
corresponding to  an  aggregate employment  effect  of  3  to  4  per cent. The effect was  driven  by  an 
increase in part-time employment while full-time employment was not affected.135 

According  to  the  recent  data  of  the  Spanish  authorities,  there  has  been  an  upward  trend  in  retail 
sales and employment since the 2012 liberalisation of shop opening hours which allowed retailers to 
stay open in total at least 90 hours per week and liberalising Sunday trading.136  

A  2016  evaluation  of  the  amended  Shop  Opening  Hours  Act137    commissioned  by  the  Dutch 
government surveyed retailers both in municipalities where local authorities allow Sunday openings 
and in those where shops have to remain closed. The survey revealed that the liberalisation of rules 
on  Sunday  opening  hours  has  led  to  an  increase  in  revenues  for  two-thirds  of  retailers  in 
municipalities  where  Sunday  openings  were  allowed.  Over  30%  of  shops  not  open  on  Sundays 
experienced a drop in revenues.138  

According  to  a  survey  carried  out  by  the  Finnish  Commerce  Federation  in  2016  after  the 
liberalisation  of  shop  opening  hours  in  Finland,139  over  80%  of  daily  consumer  goods  shops  and 
almost half of specialised goods shops felt that competition has become tighter due to the reform 
and 46% of retail businesses have increased the number of employees. 

Also studies looking at the effects of deregulation across the EU reached similar conclusions. A study 
conducted recently for 30 countries (27 MS, Norway, Iceland and Switzerland) which evaluated the 
impact  of  changes  in  shop  opening  hours  regulation  between  1999  and  2013  on  economic 

retailing,  Diskussionspapiere,  Universität  Erlangen-Nürnberg,  Lehrstuhl 

133 Study carried out by Capgemini Consulting for the French authorities (Direction Générale des Entreprises), 
2013. 
134  OECD  September  2015:  France.  Évaluation de  certaines mesures  de  la Loi  pour  la croissance,  l’activité  et 
l’égalité des  chances économiques et  perspectives de futures réformes. 
135 M. Bossler, M. Oberfichtner, (2014) The employment effect of deregulating shopping hours: Evidence from    
German 
insbes.  
Arbeitsmarkt- und Regionalpolitik, No. 91. 
136 Reply of the Spanish authorities to the European Commission questionnaire on operational restrictions.  
137  The  2013  amendments  broadened  Dutch  municipalities’  powers  to  authorize  exemptions  from  the 
prohibition to open shops on Sundays and several holidays. 
138 
Zaken 
https://www.rijksoverheid.nl/documenten/rapporten/2016/11/01/evaluatie-winkeltijdenwet.  
139 Finnish Commerce Federation (2016) 
http://kauppa.fi/eng/press_releases/the_deregulation_of_opening_hours_has_increased_competition_and_f
acilitated_the_everyday_life_of_consumers_25883. 

Winkeltijdenwet 

Economische 

für  VWL, 

Ministerie 

Evaluatie 

(2016) 

van 

55 

 
 
 
                                                            
performance  concluded  that  Sunday  trade  deregulation  has  a  significant  positive  impact  on 
employment, stemming both from new firms entering the market and from job creation in existing 
firms. 140  

More flexible regulation is also likely to influence the employment structure of the sector, providing 
new  work  possibilities  for  certain  groups  of  employees.  Young  people  may  be  open  to  flexible 
working  arrangements  in  exchange  for  increased  remuneration.  Extension  of  shop  opening  hours 
can  also  provide  for  work  possibilities  to  those  engaged  in  other  activities  most  of  the  time 
(students,  part-time  workers,  parents  taking  care  of  young  children).  This  can  allow  retailers  to 
flexibly  distribute  work  schedules,  at  the  same  time  protecting  employees  who  are  averse  to 
working beyond regular hours.141  The 2016 evaluation of the amended Shop Opening Hours Act in 
the Netherlands cited above showed that the possibility to work on Sundays was used most often by 
young employees who could easily combine this job with other engagements during the week and 
who were keen on receiving the remuneration supplement for Sunday work.  

Effects on different types of businesses 

The deregulation of shop opening hours seems to bring economic benefits to the sector. However, 
the  analyses  looking  at  the  effects  of  such  reforms  on  different  types  of  businesses  show  a  more 
ambiguous picture.  

The  analyses  show  that  large  stores,  in  particular  chain  stores,  are  more  likely  to  benefit  from 
deregulation. They can use the economies of scale to compensate for additional costs and they have 
larger  staff  capacity  allowing  for  more  flexible  working  arrangements.  Small  shops  run  by 
independent retailers may not be able to afford any working time flexibility or additional costs linked 
to extended working hours. However, whether the regulation would indeed favour larger stores may 
depend  on  the  small  retailer's  offer  and  efficiency.  Studies  have  shown  that  if  small  retailer's  cost 
efficiency  does  not  differ  significantly  from  the  cost  efficiency  of  a  larger  chain  store,  the 
deregulation  might  favour  the  independent  retailer.142    Also,  small  shops  could  benefit  from 
unrestricted  shop  opening  hours  with  increased  operations  if  their  offer  is  complementary  to  the 
operations of larger stores.143 

While many studies have dealt with the impact of shop opening hours' regulation on sales in brick-
and-mortar shops, the issue of the possible impact of reforms in this field on the potential shift from 
or to on-line sales does not seem to have been analysed.  

Effects on consumers 

Extended  shop  opening  hours  provide  consumers  with  more  flexibility  in  choosing  the  shopping 
time,  the  possibility to  shop after  long  working hours  and  on weekends.  They  are  likely  to  benefit 
from a better shopping experience (less crowded shops) and an easier access (less traffic). A study 

140 C. Genakos, S. Danchev (2015) Evaluating the Impact of Sunday Trading Deregulation. 
141 Ibid. 
142 T. Wenzel (2011) Deregulation of Shopping Hours: The Impact on Independent Retailers and Chain Stores. 
143 C. Genakos, S. Danchev (2015) Evaluating the Impact of Sunday Trading Deregulation. 

56 

 
 
 
 
 
 
 
 
                                                            
which  modelled  the  impact  of  the  liberalisation  of  shop  opening  hours  in  Germany  showed  that 
while  there  was  no  certainty  on  benefits  for  all  types  of  retail  businesses,  the  total  welfare  and 
consumer surplus increased unambiguously after the reform.144  

Studies analysing behaviour patterns show that consumers are likely to spend more time shopping 
every  week  when  the  opening  hours  have  been  extended.  When  the  regulation  was  relaxed  in 
Denmark in 1990s, a consumer survey carried out after the implementation of the reform showed 
that  consumers  where  using  16%  of  their  total  shopping  time  within  the  new  opening  hours 
introduced by the 1995 Shops Act, i.e. weekday evenings, Saturday afternoons and Sundays.145 

Another  study  showed  that  households  in  the  Netherlands  were  effectively  making  use  of  Sunday 
shopping possibilities in municipalities where shops were allowed to stay open that day.146 Two out 
of three households declared using this opportunity on average nine Sundays per year.147  

According  to  the  2016  survey  of  the  Finnish  Commerce  Federation  cited  above,148  families  with 
children and people living in big cities found that the deregulation has made it easier to arrange their 
everyday  life.  Three  consumers  out  of  five  have  visited  stores  during  the  new  opening  hours.  The 
opening hours on Saturday nights or Sundays have been used the most. 

5.3.  Product-specific sales restrictions  

Some  Member  States  impose  specific  distribution  channels  for  alcohol,  tobacco,  and  non-
prescription  medicines  (sometimes  known  as  over-the-counter  or  OTC  medicines),  mainly  due  to 
public  health  concerns.  This  chapter  will  explore  the  specificities  of  sales  of  non-prescription 
medicines. 

Regulation by Member States 

Sales of non-prescription medicines 

The market for non-prescription medicines 

144 T. Wenzel (2011) Deregulation of Shopping Hours: The Impact on Independent Retailers and Chain Stores. 
145 A. Hoffmann, M. Konnerup, M. Gørtz, A.H. Larsen, N. Lund, A. Madsen  (1999):  An Analysis of the Danish 
Shops Act – Consequences for Shops, Consumers and Employees for the Danish Ministry of Trade and Industry.  
146 After a liberalisation of the Dutch Shop Opening Hours Act in 2013. 
147  GfK Supermarktkengetallen, Week 04 2016; 
http://www.gfk.com/fileadmin/user_upload/country_one_pager/NL/documents/GfK_Kengetallen_Supermark
ten_januari_2016_vM.pdf. 
148 Finnish Commerce Federation (2016); 
http://kauppa.fi/eng/press_releases/the_deregulation_of_opening_hours_has_increased_competition_and_f
acilitated_the_everyday_life_of_consumers_25883. 

57 

 
 
 
 
 
 
 
 
 
                                                            
Medicines  should  be  sold  on  prescription  when  they  are  likely  to  cause  more  effects  and  adverse 
reactions149.  These  medicines  require  higher  supervision  and  shall  therefore  be  prescribed  by  a 
medical  doctor.  Medicinal  products  contain  active  substances  aiming  to  treat  or  prevent  diseases 
and  can  also  cause  adverse  reactions.  Consequently,  a  number  of  provisions  for  the  retail  sales  of 
medicines with the ultimate goal to protect public health have been adopted at the European Union 
level as well as by Member States.  

In  the  EU,  most  non-prescription  medicines  are  sold  through  pharmacies.  The  sale  of  medicines 
through retail shops, represents a minor share of the non-prescription medicines market.  

In practice,  there is  no  single  definition  of  non-prescription  medicines  and  the group  of  medicines 
belonging  to  the  'non-prescription'  category  varies  from  country  to  country.  The  main  types  of 
medicines  sold  without  prescription  are  cough  and  cold  medicines  (20%  of  the  value  of  non-
prescription  medicines  sold),  pain  relief  (16%),  digestive  medicines  (14%),  and  vitamins,  minerals, 
supplements (VMS) and tonics (14%).  

Figure 26: Categories of non-prescription medicines in the EU – share of the market in 2010 in value (%)  

Source: IMS Health150 

149 Article 71 of Directive 2001/83/EC on medicinal products for human use provides that "medicinal products 
shall be subject to medical prescription where they:  
- are likely to present a danger either directly or indirectly, even when used correctly, if utilized without 
medical supervision, or  
- are frequently and to a very wide extent used incorrectly, and as a result are likely to present a direct or 
indirect danger to human health, or  
- contain substances or preparations thereof, the activity and/or adverse reactions of which require further 
investigation, or 
- are normally prescribed by a doctor to be administered parenterally". 
150  IMS Health, 

http://www.imshealth.com/imshealth/Global/Content/Consumer%20Health/Documents/The_Rising_Ti
de_O_OTC_Europe.pdf (retrieval date: 08.05.2011). 

58 

Other OTC23%Cough & Cold20%Pain Relief16%Digestives14%VMS & Tonics14%Skin 9%Eye Care4% 
 
 
 
 
 
 
                                                            
Total sales of non-prescription medicines in selected EU countries reached €20.6 bn in 2015. This is a 
fraction (17.5%) of the total market of pharmaceutical products for the same year.  

Figure 27: total sales of non-prescription medicines in selected EU countries (€ million) 

Sales of non-prescription medicines (source: AEGSP) 

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Source: AEGSP  

Sales outlets for non-prescription medicines 

Prescription-only medicines and non-prescription medicines are not always sold in the same outlets. 
The ECJ has recognised that Member States may restrict the retail sale of prescription-only medicinal 
products  to  pharmacists  alone,  depending  on  the  level  of  protection  of  public  health  they  wish  to 
ensure.151  In  practice,  all  EU  countries  limit  the  sales  of  prescription-only  medicines  (POM)  to 
pharmacies to ensure the protection of public health.  

Sales channels for non-prescription medicines are more diverse. Depending on the country, national 
legislation  determine  the  person  entitled  to  supply  medicines  to  the  public  and  whether  the 
medicines can be sold in pharmacies, para-pharmacies, or through other outlets such as drugstores, 
supermarkets or vending machines. In sixteen countries,152 non-prescription-medicines may only be 
sold in pharmacies. In countries where the sale of non-prescription medicines is permitted outside 
pharmacies,  other  restrictions  may  apply.  They  are  compatible  with  the  Treaty  rules  on  free 
movement if they are justified and proportionate. In Denmark, Italy and Portugal, non-prescription 
medicines must be sold in specific stores or a license may be required. In some countries, they can 

151 Judgment of 19 May 2009 in Joined Cases C-171/07 and C-172/07 Apothekerkammer des Saarlandes and 
Others v Saarland, EU:C:2009:316. 
152  Austria,  Belgium,  Bulgaria,  Czech  Republic,  Estonia,  Finland,  France,  Germany,  Latvia,  Lithuania, 
Luxembourg, Malta, Romania, Slovakia, Slovenia, Spain.   

59 

 
 
 
                                                            
 
 
 
be  sold  in  specialised  or  non-specialised  stores  but  the  presence  of  a  pharmacist  or  a  health 
technician is required (Italy, Portugal).  

Figure 28: Sale outlets of non-prescription medicines outside pharmacies in 28 European countries 

Key non-prescription medicines are sold 
outside of pharmacies without additional 
requirements 
Other non-prescription medicines are sold 
outside of pharmacies, or with additional 
requirements 

Non-prescription medicines are not sold 
outside of pharmacies 

Source: information collected from Member States and through dedicated studies 

In countries where non-prescription medicines can be sold outside of pharmacies, this authorisation 
may apply to a limited range of products. In Greece, Ireland, or Sweden, only a limited range of non-
prescription medicines may be sold outside pharmacies.  

Three  countries  allow  a  wide  range  of  non-prescription  medicines  to  be  freely  sold  outside  of 
pharmacies: the Netherlands, Poland and the UK. Nonetheless, with the exception of Poland, non-
prescription medicines do not make up a significant part of pharmaceutical sales in these countries. 
Non-prescription  medicines  account  for  13%  and  13.5%  of  the  pharmaceutical  market  in  the 
Netherlands and the UK respectively, and for 32% in Poland.  

60 

 
 
 
 
 
To determine how restrictive a country’s rules for selling medicines are, it is therefore important to 
consider  not  only  the  outlets  authorised  to  sell  medicinal  products,  but  also  which  medicinal 
products they can sell. 

Recent trends in sales channels for non-prescription medicines 

In  the  last  ten  years,  there  has  been  a  trend  towards  allowing  non-prescription  medicines  outside 
pharmacies. Reforms were carried out with the objective to respond to the demands of consumers, 
in  certain  cases  reducing  prices  for  consumers.  Reforms  have  taken  place  in  Portugal  (2005),  Italy 
(2007), Sweden (2009) and Denmark (2015). In Portugal and Italy, non-prescription medicines were 
legally  allowed  to  be  sold  outside  pharmacies.  Dedicated  stores  were  created:  the  presence  of  a 
health technician or of a pharmacist is required. In Denmark, as a result of the reform, the sale of 
several  non-prescription  medicines  was  allowed  outside  pharmacies.  Further  liberalisation  was 
carried out in 2015. In Sweden, a reform was carried out in 2009. Two of the major changes were a 
change in ownership regulations (previously all of the pharmacies in Sweden were state-owned by 
Apoteket AB)  and  in the regulations  concerning  sale  of  non-prescription  medicines  in other  places 
than  pharmacies.  Several  authorities  have  followed  up  on  the  consequences.  In  particular,  the 
Swedish  Competition  Authority  submitted  a  report  in  2017153  that  showed  that  the  range  of  non-
prescription  medicines  has  increased,  and  that  they  have  become  cheaper  outside  of  pharmacies. 
The report concluded that, "at least in this regard, the pharmacy reform has been a success". 

The  Finnish  Competition  Authority  published  a  report  in  2012  on  the  provision  of  pharmaceutical 
products and proposed for consideration that non-prescription medicines or at least some of them 
would  be  sold  outside  pharmacies.  Authorising  the  sale  of  non-prescription  medicines  outside 
pharmacies was considered but not carried out in Estonia and Latvia.  

On-line sales of non-prescription medicines 

Non-prescription medicines can be sold on-line. Their sales are increasing. In 2014, on-line OTC sales 
reached a value of €2.6 billion,154 and are expected to grow in the future. 

153  Prisutveckling  på  receptfria  läkemedel  sedan  omregleringen  Har  priserna  på  receptfria  läkemedel  blivit 
lägre på grund av ökad konkurrens? Rapport 2017:3, Konkurrensverket. 
154 D. Hildebrand (2017) Updated report on liberalising OTC drugs markets in the EU: EE&MC survey,  based on 
data  from  the  following  countries:  Austria,  Belgium,  Bulgaria,  Czech  Republic,  Denmark,  France,  Germany, 
Hungary,  Italy,  Netherlands,  Norway,  Poland,  Portugal,  Romania,  Slovakia,  Spain,  Sweden  and  the  United 
Kingdom.  

61 

 
 
 
 
 
 
 
 
                                                            
Figure 29: On-line  sales of non-prescription medicines in  selected EU  countries: market  and growth 
forecast (2015 and 2020, in million € and %) 

Source:  Shop  Apotheke  Europe  2017,  Annual  Report  2016,  93,  as  quoted  in  Updated  report  on  liberalising  OTC  drugs 
markets in the EU: EE&MC survey, Prof. Mag. Dr. Dr. Doris Hildebrand, Bonn, 2017. 

The main reasons for buying medicines on-line appear to be lower prices (68% of respondents to a 
survey carried out in Germany) and convenience (ease of ordering and delivery). 

Figure 30: Reasons for using on-line pharmacies 

Reasons for using on-line pharmacies 

No answer

None of the above

Discreet purchasing

Greater choice of products

No opening hours

No need to leave the house

Medicines are delivered directly at home

Cheaper prices

Share of respondents

0

10 20 30 40 50 60 70 80

Source: Umfrage zu Vorteilen von Online-Apotheken in Deutschland nach Altersgruppe, Statista, 2017. 

62 

 
 
 
 
Nonetheless,  on-line  sales  of  non-prescription  medicines  remain  marginal  compared  to  sales  in 
stores. In Germany, one of the main markets for on-line sales of pharmaceutical products, only 12% 
of non-prescription medicines were sold on-line in 2015, and 2.5% in Poland.155 

Contrary  to  prescription-only  medicines,  national  authorities  cannot  prohibit  cross-border  sales  of 
non-prescription medicines via the internet156 and consumers can in all 28 Member States, for their 
personal  needs,  buy  on-line  non-prescription  medicines157.  EU  law  establishes  conditions  for  the 
sales of medicines on-line aimed at ensuring the public health protection and avoiding the entry of 
falsified  medicines  in  the  legal  supply  chain.158  Buying  on-line,  consumers  might  have  concerns 
whether  the  seller  is  a  legal  or  an  illegal  on-line  pharmacy.  To  address  this,  a  European  logo  was 
introduced in 2013 and should be displayed on legal pharmacies.159 According to the EU legislation, 
the  Member  States  have  to  ensure  that  the  person  offering  the  medicinal  product  for  sale  is 
authorised  or  entitled  to  supply  to  the  public  in  accordance  with  the  national  legislation  in  which 
that person is established In Member States where sales of non-prescription medicines are reserved 
to  pharmacies,  competent  authorities  for  health have  decided  that  only  pharmacies  can sell these 
products  on-line.  In  addition,  certain  countries  where  non-prescription  medicines  can  be  sold 
outside of pharmacies still choose to restrict on-line sales to pharmacies – in practice some countries 
such  as  Italy  limit  licenses  for  on-line  sales  of  non-prescription  medicines  to  persons  operating  a 
physical pharmacy that is open to the public.  

Public policy objectives pursued by Member States 

The main justification for limiting sales of medicines is public health protection. Member States have 
put  forward  as  a  justification  the  need  for  appropriate  advice  on  the  use,  side  effects  and 
combination of medicines. It is considered in certain countries that healthcare professionals such as 
pharmacists  provide  the  necessary  safeguards  for  the  retail  of  medicinal  products  and  are  in  a 
position  to  furnish  consumers  with  appropriate  information.  Pharmacists  have  the  professional 
qualifications  and  education  to  advise  how  consumers  and  patients  manage  their  medicines. 
Pharmacists  also  participate  in  health  promotion  campaigns.  Pharmacists  are  also  responsible  for 
ensuring  appropriate  storage  and  traceability  of  medicines,  and  for  collecting  adverse  reactions 
and reporting them to the competent authorities.  

Economic impact of restrictions to sales of non-prescription medicines 

Several  Member  States  have  opened  up  sales  of  non-prescription  medicines  to  a  wider  variety  of 
retailers  with  the  aim  of  improving  accessibility  and  convenience,  and  respond  to  the  demands  of 

155  F.  Wartenberg  (2017)  OTC,  Self-care  Medical  Devices,  Food  Supplements  and  Herbal  Products:  Market 
trends and Opportunities in Germany and Central Europe, as quoted in D. Hildebrand, 2017. 
156  Judgment  of  11  December  2003,  Deutscher  Apothekerverband  eV  v  0800  DocMorris  NV  and  Jacques 
Waterval, C-322/01, EU:C:2003:664.   
157 Judgement of 7 March 1989, Schumacher v Hauptzollamt Frankfurt am Main-Ost, C-215/87,  [1989] ECR 617 
158 Article 85c) of Directive 2011/62/EC on falsified medicinal products. 
159  Directive  2011/62/EU  on  falsified  medicinal  products  harmonises  conditions  and  safety  standards  for  the 
distance sales of medicinal products. In particular, it introduces a common, EU-wide logo to identify legal on-
line pharmacies. The logo must be displayed on the website of on-line medicine retailers and must redirect to 
a webpage of the national authority of the Member State in which the retailer is established, showing the list 
of legally operating on-line pharmacies and retailers registered in that Member State. 

63 

 
 
                                                            
consumers, in certain case reducing prices. It can also have a positive impact on the competitiveness 
of the retail sector. The evaluation of the impact of these reforms is interesting in trying to estimate 
the effects of regulations limiting sales channel for non-prescription medicines. 

Prices  
The markets for medicines have many specific features. The price of non-prescription medicines is 
not  determined  only  by  market  forces.  Some  non-prescription  medicines  are  reimbursed,  and  as 
with  prescription-only  medicines,  prices  and  reimbursement  levels  are  determined  by  Member 
States.  EU  legislation  on  the  transparency  of  pricing  and  reimbursement  of  medicinal  products 
(Directive  89/105/EC,  or  the  Transparency  Directive)  aims  at  ensuring  a  certain  degree  of 
harmonisation  in  the  way  national  authorities  determine  prices  for  reimbursed  products.  But  the 
Directive  does  not  affect  national  policies  on  the  setting  of  prices  of  the  organisation  of  social 
security schemes.  

In  some  Member  States,  manufacturers  are  free  to  set  prices  from  the  factory,  while  distribution 
prices (wholesale and retail prices) are regulated by fixed or maximum margins or mark-ups (Estonia, 
Malta,  Slovakia,  Spain  for  advertisable  non-prescription  medicines,  and  Germany  for  non-
prescription medicines which are nevertheless reimbursable). In other countries prices are regulated 
at all levels of the value chain. In Austria, Belgium, Greece, Latvia and Luxembourg, prices out of the 
factory must be approved or at least notified to the competent authorities.160 

Because the price determinants of non-prescription medicines vary greatly between countries, it is 
difficult to assess the impact on prices of changes in sales legislation. Studies also stress the fact that 
medicines  prices  are  determined  by  a  number  of  factors  other  than  regulation  of  distribution 
channels  The  price  elasticity  of  medicines  is  low,  and  lower  prices  or  reductions  in  prices  of 
prescription  and/or  reimbursable  medicines  are  usually  the  result  of  drops  in  negotiated  prices  or 
reimbursement levels.161 

Nonetheless,  studies  that  have  attempted  to  compare  the  prices  of  selected  non-prescription 
medicines  have  shown  that prices  are higher  in countries  where  they are  only  sold  in pharmacies. 
Comparing the price of a selected basket of pain relief, cough and cold, and digestive medicines, it 
appears that prices in Romania (where non-prescription medicines are restricted to pharmacies) are 
more  than  twice  (254%)  as  high  as  in  the  Netherlands,  the  cheapest  country  considered.162  In 
addition,  the  price  gap  has  increased  throughout  the  years.163  Overall,  the  additional  cost  to 
consumers ("consumer damages") of limiting sales of these medicines (pain relief, smoking cessation 
solutions,  and  cough  and  cold  and  digestive  medicines)  to  pharmacies  is  estimated  at  €9.3  bn164 
throughout the EU. 

Countries that have chosen to open up sales of non-prescription medicines to sales channels other 
than  pharmacies  report  that  the  impact  on  prices  is  either  neutral  or  positive.  Most  recently,  the 

160 D. Hildebrand, 2017. 
161  Etude  comparative  des  prix  des  médicaments  entre  la  France  et  l’Allemagne,  Centre  Européen  de  la 
Consommation, 2012. 
162 D. Hildebrand, 2017. 
163  D.  Hildebrand,  2018.  Between  2011  and  2017,  in  9  Member  States  difference  to  the  Dutch  price  for  the 
basket increased, whereas it decreased in 2 Member States.  
164 Ibid. 

64 

 
 
                                                            
Swedish competition authority assessed the impact of the opening of the Swedish non-prescription 
medicines market in 2009.165 On average, the popular non-prescription pharmaceuticals included in 
the  study  are  sold  in  other  outlets  at  a  price  that  is  11%  lower  than  in  pharmacies.  There  are, 
however,  major  variations  both  within  and  between  different  categories  of  pharmaceuticals.  The 
greatest difference exists in treatments against aches and fevers, where the prices are an average of 
22% lower in outlets that are not pharmacies. The same results were found in Portugal, where prices 
of  non-prescription  medicines  were  on  average  13%  lower  in  supermarkets  than  in  pharmacies  in 
2016,166 and in Italy, where the difference reaches 10%.167 

Accessibility for consumers 

Greater flexibility in the sales of medicines could improve accessibility and could better respond to 
the demands of consumers. Pharmacy associations have raised concerns that opening up the market 
for non-prescription medicines may deprive pharmacies of an important source of revenue and lead 
to closures of pharmacies, particularly outside of cities. It is difficult to state whether such a trend 
could be confirmed or not. A 2014 report assessed that 58% of EU citizens could reach their nearest 
pharmacy  within  5  minutes,  and  98%  could  reach  their  nearest  pharmacy  in  30  minutes.168  In 
practice, market opening for non-prescription medicines has often been coupled with the removal of 
restrictions for pharmacy openings (in Sweden and Denmark for instance). The latter has led to an 
increase  in  the  number  of  pharmacies:  the  Swedish  Competition  Authority  concluded  that  around 
200 new pharmacies had been established within a year from the new regulation (mostly in urban 
areas), and districts that previously did not have a pharmacy got one.  

Furthermore,  the  development  of  e-commerce  in  non-prescription  medicines  can  be  expected  to 
have  a  positive  impact  on  the  convenience  of  patients.  Little  evidence  is  available  so  far,  partly 
because  of  the  conditions  that  apply  in  countries  where  on-line  sales  are  authorised.  There  are 
however indications that on-line sales could respond to consumers' demands to medicines. Reasons 
for  the  choice  of  internet  as  a  sales  channel  include  lower  prices  and  the  comfort  of  buying  from 
home.169  

National rules limiting the number of outlets in one form or the other are restrictions to the freedom 
of establishment, which are compatible with Article 49 TFEU if their justification on the ground of an 
overriding  reason  of  public  interest  or  proportionality  are  demonstrated.  The  ECJ  has  ruled  for 
example  that  a  national  legislation  which  lays  down,  as  an  essential  criterion  for  determining 
whether  a  need  for  the  establishment  of  a  new  pharmacy  exists,  a  rigid  limit  on  the  "people 
remaining  to  be  served",  where  the  competent  authorities  cannot  depart  from  that  limit  to  take 
account of particular local geographical conditions is contrary to Article 49 TFEU.170   

Health and quality of service 

165  Konkurrensverket,  Prisutveckling  på  receptfria  läkemedel  sedan  omregleringen  Har  priserna  på  receptfria 
läkemedel blivit lägre på grund av ökad konkurrens? Rapport 2017:3. 
166 Medicamentos mais baratos no híper. Testesaúde 124, 24 November 2016. 
167 http://www.vita.it/it/article/2016/11/29/i-farmaci-al-supermercato-costano-il-10-in-meno/141768/ 
accessed on 27 April 2017. 
168 PGEU Annual Report 2014.  
169 Press release by Datamar International s.r.o., 6 December 2016.  
170 Judgment of 13 February 2014 , Susanne Sokoll-Seebacher, C-367/12. 

65 

 
 
 
                                                            
Opening  up  distribution  channels  for  non-prescription  medicines  sales  has  been  criticised  due  to 
concerns  about  misuse  and  a  decrease  in  the  quality  of  service  offered  to  patients.  Pharmacists 
argue  that  professional  advice  and  care  are  very  important  when  delivering  medicines.  They 
highlight the risks of self-medication, even with commonly used drugs and of medicine interactions, 
and warn against the risks of an increase in drug use. One possible advantage of the presence of a 
pharmacist  could  be  to  offer  individualised  advice  to  patients  when  they  can  access  their  medical 
records.  But  although  this  may  become  more  common  with  the  development  of  e-health, 
pharmacists in most European countries cannot currently store patient data or have access to it.171  

Sales of non-prescription medicines show a slight increase over previous years, but do not appear to 
follow  liberalisation  patterns.  In the Netherlands,  they  have  even  decreased.  This  may  be  because 
even  where  reforms  have  taken  place,  the  majority  of  non-prescription  medicines  continue  to  be 
sold  in  pharmacies.  Except  for  the  Netherlands,  most  non-prescription  medicines  are  sold  in 
pharmacies and drugstores and other outlets only hold a small share of the market.172  

Even when liberalisation has taken place, counselling by trained staff continues to be an important 
factor  of  choice  (for  over  half  of  patients  in  Sweden  for  instance).  Geographic  proximity,  opening 
hours and product range were reported as the most important factors in retailer choice.173  

5.4.  Sales promotions and discounts  

Sales promotions and discounts are both key for retailers. They provide an opportunity to, inter alia, 
raise  brand  awareness,  increase  sales  to  consumers,  attract  new  customers,  establish  consumer 
loyalty or reduce and replenish stock. Sales promotions and discounts can also be part of a retailer's 
strategy for encouraging the use of a specific distribution channel in a multi-channel environment or 
for entering a new market. 

This section focuses on national regulations limiting retailers' freedom to decide on and to advertise 
or  announce  sales  promotions  and  discounts  as  part  of  their  business  operations  in  the  following 
four categories: 

a.  Restrictions on end-of-season sales.  
b.  Restrictions on discounts (outside fixed end-of-season sales periods if existing in a Member 

State). 

c.  Restrictions on end-of-business sales. 
d.  Restrictions on sales below cost (excluding competition rules). 

171  Although  in  several  countries  pharmacies  cannot  store  patient  data  –  eg.  Finland,  Greece,  Portugal, 
Romania or store and access it: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, Greece, Latvia, Lithuania, 
Luxembourg, Portugal, Romania. 
172  James  Dudley  International,  Ltd  (2016)  OTC  Distribution  in  Europe  The  New  Global  Agenda  -  New  2016 
Edition. 
173 H. Håkonsena, K. Andersson Sundella, J. Martinssonb, T. Hedenruda (2016) Consumer preferences for over-
the-counter drug retailers in the reregulated Swedish pharmacy market, Health Policy 120. pp. 327–333. 

66 

 
 
 
 
 
                                                            
In the absence of exhaustive EU harmonisation, Member States may regulate retail sector activities' 
including sales promotions and discounts as long as relevant EU legislation is complied with. Around 
half of the Member States regulate sales promotions and discounts in one or more of the categories 
mentioned above.  

Member States must comply with the fundamental freedoms enshrined in the Treaty. Furthermore, 
they  must  comply  with  EU  secondary  legislation.  So,  for  example,  sales  promotions  and  discounts 
constitute  commercial  practises  within  the  meaning  of  Article  2(d)  of  the  Unfair  Commercial 
Practices Directive ('UCPD'), if they are linked to promotional activities, sale or supply of a product 
directed  to  consumers.  Sales  promotions  and  discounts  fall  under  the  scope  of  the  UCPD,174  if 
national  authorities  or  ECJ  establish  that  the  relevant  national  provision  has  the  objective  of 
protecting  consumers'  economic  interests.  If  a  commercial  practice  does  not  affect  consumers' 
economic  interest  to  some  degree  but  exclusively  relates  to  business-to-business  transactions  or 
harms only competitors' economic interests, the practice falls outside the scope of the UCPD.175   

In  this  context  also  the  Misleading  and  Comparative  Advertising  Directive  is  relevant.  After  the 
adoption of the UCPD the provisions on misleading advertising have been restricted to business-to-
business  relations,  while  the  rules  on  comparative  advertising  also  apply  indistinctively  in  the 
context of advertisements directed at consumers. In that regard, both Directives complement each 
other.  

The UCPD, which constitutes exhaustive harmonisation, addresses several unfair practices linked to 
sales  promotions  and  discounts.  The  UCPD's  Annex  I  includes  a  prohibition  of,  inter  alia,  bait 
advertising or certain competition and prize promotions: this type of behaviour is per se unlawful. 
Beyond  that,  as  the  ECJ  clarified,  the  UCPD  precludes  any  general  prohibition  on  commercial 
practices like sales promotions and discounts. Hence, of the types of behaviour set out in Annex I are 
absent,  any  practice  must  be  assessed  on  a  case-by-case  basis  in  line  with  the  tripartite  test  in 
Articles 5-9 UCPD to allow a conclusion on the unfairness of the retailers' activities ensuing from a 
national regulation or restriction.176   

In the past, the ECJ has applied this approach to various national rules regarding sales promotions 
and  discounts.  The  ECJ  decided,  for  example,  on  the  incompatibility  with  the  UCPD  of  general 
prohibitions of combined offers177, of sales with bonuses178 or of price reduction announcements179. 

174  Judgment  of  9  November  2010,  Mediaprint  Zeitungs-  und  Zeitschriftenverlag,  Case  C-540/08, 
EU:C:2010:660    paragraph  18;  Judgment  of  14  January  2010,  Zentrale  zur  Bekämpfung  unlauteren 
Wettbewerbs eV v Plus Warenhandelsgesellschaft mbH, C-304/08, EU:C:2010:12, paragraph 37. 
175 Order of 8 September 2015, Cdiscount, C-13/15, EU:C:2015:560. Seven Member States currently apply the 
UCPD also to B2B relationships and, hence, extend the scope of application of the UCPD significantly in their 
national legislation. 
176  Order  of  30  June  2011,  Wamo  BVBA  v  JBC  NV  and  Modemakers  Fashion  NV,  C-288/10,  EU:C:2011:443, 
paragraphs 34 ff.  
177  Judgment  of  23  April  2009,  Joined  Cases  C-261/07  and  C-299/07  VTB-VAB  NV  v  Total  Belgium  NV  and 
Galatea  BVBA  v  Sanoma  Magazines  Belgium  NV,  EU:C:2009:244;  Judgment  of  11  March  2010, 
Telekommunikacja  Polska  SA  w  Warszawie  v  Prezes  Urzędu  Komunikacji  Elektronicznej,  C-522/08, 
EU:C:2010:135;  Judgment  of  18 July  2013,  Citroën  Belux  NV  v  Federatie  voor  Verzekerings-  en  Financiële 
Tussenpersonen, C-265/12, EU:C:2013:498..  
178  Judgment  of  9  November  2010,  Mediaprint  Zeitungs-  und  Zeitschriftenverlag  GmbH  &  Co.  KG  v 
"Österreich"-Zeitungsverlag GmbH, C-540/08, EU:C:2010:660.  

67 

 
 
                                                            
The ECJ has ruled that, in so far as that provision pursues objectives relating to consumer protection, 
the  UCPD  precludes  national  provisions  establishing  the  presumption  of  unlawfulness  and 
prohibiting, generally and pre-emptively, sales below cost without verification of their unlawfulness 
and without providing an appropriate justification.180   

Based  on  the  Consumer  Rights  Directive  it  is  possible  for  Member  States  to  impose  certain  pre-
contractual information requirements for on-premises sales, e.g. the dual display of the regular and 
the  reduced  price.  This  is  not  possible  for  distance  and  off-premises  contracts  due  to  full 
harmonisation.  Only  Cyprus  and  Croatia  decided  to  require  off-line  retailers  to  display  both  the 
regular and the reduced price in-store.  

The  E-Commerce  Directive  obliges  Member  States  to  ensure  that  on-line  retailers  clearly  identify 
promotional offers, such as discounts, premiums, and gifts as well as stating the conditions to qualify 
for such an offer. Furthermore, on-line retailers have to comply with the law in their home Member 
State  and  other  Member  States  cannot  restrict  these  retail  services,  unless  a  public  policy  ground 
exists or a field referred to in the Annex to the E-Commerce Directive is affected. 

Regulation in Member States 

General remarks and recent developments 

When it comes to regulating sales promotions and discounts Member States fall into two categories. 
In total, 15 Member States181  opted for a complete liberalisation for restrictions encompassed in the 
scope  of  the  categories  examined.  The  remaining  13  Member  States182    impose  restrictions  in  the 
analysed categories on retailers' operations to varying degrees. Such restrictions must be analysed 
against the benchmark of inter alia the fundamental freedoms enshrined in the Treaty. EU secondary 
law can also be relevant for certain aspects.  

Figure 31: Member States applying restrictions on sales promotions and discounts  

179  Order  of  30  June  2011,  Wamo  BVBA  v  JBC  NV  and  Modemakers  Fashion  NV,  C-288/10,  EU:C:2011:443;  
Order  of  15  December  2011,  INNO  NV  v  Unie  van  Zelfstandige  Ondernemers  VZW  (UNIZO)  and  Others,  C-
126/11  EU:C:2011:851;  Order  of  8  September  2015,  Cdiscount,  C-13/15,  EU:C:2015:560;  Judgment  of 
17 January 2013, Georg Köck v Schutzverband gegen unlauteren Wettbewerb, C-206/11, EU:C:2013:14. 
180 Order of 7 March 2013, Euronics Belgium CVBA v Kamera Express BV and Kamera Express Belgium BVBA, C-
343/12, EU:C:2013:154. 
181  Cyprus,  the  Czech  Republic,  Germany,  Denmark,  Estonia,  Finland,  Hungary,  Ireland,  Lithuania,  Malta,  the 
Netherlands, Poland, Slovakia, Sweden, the UK. 
182 Austria, Belgium, Bulgaria, Croatia ,Greece, France, Italy, Latvia, Luxembourg, Portugal, Romania, Slovenia, 
Spain. 

68 

 
 
 
                                                                                                                                                                                         
Source: information collected from Member States and through dedicated studies 

In  recent  years  there  has  been  a  trend  in  Member  States  towards  reviewing  and  assessing  the 
existing legislation on sales promotions and discounts – either by a general overhaul or by a targeted 
approach. The majority of Member States adopted liberalizing reforms, while only a few decided to 
restrict further in their national legislation. The developments in Member States are highlighted in 
subsequent sections for each category of restrictions. 

Restrictions on end-of-season sales 

In all Member States having restrictions on end-of-season sales the most common practise is fixing 
the start date and the duration of such sales. Furthermore, Member States also impose notification 
obligations,  a  prohibition  to  apply  discounts  during  a  specific  period  preceding  the  end-of-season 
sales period, a prohibition to sell products at a reduced price during end-of-season sales, if they have 
been purchased within a certain period of time preceding the end-of-season sales, or a prohibition 
to announce price reductions that will be applied during the end-of-season sales period in advance. 
These types of regulation exist in ten Member States.183  Noteworthy is the situation in Spain where, 
despite  the  liberalisation  at  national  level  to  increase  competitiveness  and  growth  and  to  comply 
with  a  Spanish  Constitutional  Court  decision  declaring  that  fixing  end-of-season  sales  periods  is 
unconstitutional,  some autonomous  communities  continue to  apply  restrictions  on the periods  for 
end-of-season sales. In Italy national law has delegated the competence for regulating end-of-season 
sales  to  the  two  autonomous  provinces  of  Trento  and  Bolzano.  These  Member  States  also  have 
some exceptions to the abovementioned restrictions in place allowing retailers to deviate from the 
rules, e.g. for specific touristic or border regions, for private or loyalty sales, for certain products, or 
if not all reduced products could be sold during the end-of-season sales period.  

183 Belgium, Croatia, Greece, France, Italy, Latvia, Luxembourg, Portugal, Romania, Spain.  

69 

 
 
 
                                                            
Figure 32: Member States applying restrictions on end of season sales  

Source: information collected from Member States and through dedicated studies 

Recently,  Portugal  decided  to  reform  its  end-of-season  sales  by  changing  from  fixed  dates  to  only 
imposing a maximum amount of four months in which retailers can freely decide when to promote 
end-of-season sales. The rationale behind this reform has been to confer more flexibility for retailers 
and  to  increase  competition  by  means  of  liberalisation.  In  Portugal,  retailers  have  to  notify  the 
Economic  and  Food Safety  Authority in  advance  of  end-of-season  sales.  Latvia  similarly  limits  the 
total sales period within a year to three months excluding food, seasonal products and fuel. Romania 
determines  two  periods  of  each  three  months  per  year  in  which  retailers  can  offer  end-of-season 
sales  for  a  maximum  duration  of  45  days  each.    Before  commencing  end-of-season  sales  retailers 
have  to  notify  the  relevant  municipality  including  information  on  the  products  to  be  sold,  the 
quantity  to  be  sold,  the  quantity  existing  in  the  store  and  documents  coming  from  the  supplier 
describing the  product.  In  2016,  Cyprus  decided to  abolish  its  regime  on fixed  end-of-season  sales 
periods and the Chamber of Commerce in Slovenia removed rules setting out the seasonal sales of 
textile products and footwear. 

Greece extended the end-of-season sales periods in 2014 by introducing, besides the two fixed end-
of-season  sales  periods,  additional  intermediate  sales  periods  which  can  vary  depending  on  the 
relevant region as well as a sales period of maximum one month during which all the products of a 
shop can be sold at a discount determined every two years upon decision of the Deputy Governor 
and  after  consultation  with  the  municipalities  and  trade  unions.  In  case  not  all  products  are  sold 
during the end-of-season sales, retailers can continue to sell them at a reduced price until the end of 
stock. For example, Greece allows retailers to sell products at a discount outside the end-of-season 

70 

 
 
 
sales  periods  for  up to  10  days,  if  not  more  than 50%  of  the total  number  of  products  sold  in  the 
outlet is subject to the price reduction. 

While  there  is  a  trend  towards  liberalisation,  this  trend  is  not  fully  consistent.  In  2008,  France 
decided  to  liberalize  its  retail  laws  by  introducing,  inter  alia,  so  called  'floating  sales'  allowing 
retailers  to  choose,  after  prior  authorization,  two  weeks  besides  the  fixed  end-of-season  sales 
periods for offering sales promotions or discounts. In 2015, France abolished 'floating sales' again by 
arguing that these sales predominantly benefitted large retailers and brands at the expense of small 
stores  being  unable  to  compete.  Croatia  imposed  in  2015  fixed  end-of-season  sales  periods  for 
retailers  to  safeguard  fair  competition  and  consumer  protection.  Croatia  argued  that  permitting 
unrestricted sales for retailers has led to a distortion in competition and an abuse in individual cases 
in  which  discounts  have  been  advertised,  although  the  products  were  de-facto  sold  at  the  regular 
price.   

Luxemburg decided to retain their rules on fixed end-of-season sales periods during the recent 2016 
reform, but abolished the prohibition to advertise the upcoming discounts in advance. Interestingly, 
the  end-of-season  sales  periods  are  fixed  annually  by  Luxemburg  after  a  joint  proposal  of  all 
businesses concerned.   

The  vast  majority  of  Member  States  that  have  rules  on  end-of-season  sales  apply  these 
indistinctively  to  on-line  and  off-line  retailers  or  it  is  not  conclusively  resolved  whether  the 
restrictions  are  covering  e-commerce.  Only  Croatia  differentiates  between  on-line  and  off-line 
retailers by merely requiring the latter to highlight the reduced and the regular price in the context 
of sales promotions or discounts. The reason for this distinction is the above-mentioned possibility 
for Member States to adopt or maintain rules, in line with the Consumer Rights Directive, requiring 
additional pre-contractual information to be provided by retailers for on-premises sales. Due to the 
full harmonization of distance and off-premises sales a regulation as in Croatia can be considered as 
a  permissible  information  requirement,  if  it  applies  only  to  on-premises  sales  and  at  the  pre-
contractual stage.   

Restrictions on discounts 

Some Member States 184 continue to impose general restrictions on sales promotions and discounts. 
In  Member  States  fixing  end-of-season  sales  periods  these  rules  are  typically  applicable  outside 
these specific periods to other sales promotions and discounts.  

Figure 33: Member States applying restrictions on discounts  

184 Bulgaria, France, Latvia, Portugal, Slovenia. 

71 

 
 
                                                            
Source: information collected from Member States and through dedicated studies 

The  obligations  and  restrictions  identified  in  the  mentioned  Member  States  include,  inter  alia, 
limitations  to  the  duration  retailers  can  offer  a  discount  on  a  specific  product  or  rules  on  how  to 
announce discounts and present products with reduced prices in store. Portugal recently broadened 
the scope of its rules to also ensure their application to distance and off-premises sales. Bulgaria is 
the only Member State that explicitly excludes e-commerce from its restrictions on discounts. 

Noteworthy, most Member States also impose requirements on the way in which the reduced and 
the  reference  prices  have  to  be  displayed  and  calculated.  Predominantly,  these  requirements  are 
applicable  indistinctively  to  all  categories  of  sales  promotions  and  discounts.  Exceptionally,  Cyprus 
and  Croatia  require  only  brick-and-mortar  retailers  to  highlight  the  reduced  and  the  regular  price 
when offering sales promotions or discounts. 

Both  rely  on  the  possibility  entailed  in  the  Consumer  Rights  Directive  to  impose  specific  pre-
contractual  information  to  be  provided  for  on-premises  sales.  Due  to  the  full  harmonisation  of 
distance and off-premises sales such a requirement cannot be enforced on on-line retailers. Cyprus 
limits this requirement to clothing, footwear, home appliances and furniture.  

Restrictions on end-of-business sales 

Ten Member States185  have rules regulating the commencement of end-of-business sales. A similar 
clear trend towards liberalization cannot be identified as for restrictions on end-of-season sales.  

Figure 34: Member States applying restrictions on end of business sales 

185 Austria, Belgium, Croatia, Greece, France, Italy, Latvia, Portugal, Romania, Spain. 

72 

 
 
 
                                                            
Source: information collected from Member States and through dedicated studies 

In 2012, Spain increased the time period for offering end-of-business sales from three months to one 
year  to  extend  the  potential  benefits  for  struggling  retailers.  Belgium  abolished  the  obligation  of 
retailers  to  notify  end-of-business  sales  in  advance  in  2013.  At  the  end  of  2016,  Luxemburg  fully 
abolished its restrictions on end-of-business sales, while Croatia introduced the restrictions set out 
below fairly recently in 2015. 

The  most  constraining  restrictions  are  imposed  in  Austria,  France,  Greece  by  requiring  an 
authorization  for  end-of-business  sales.  In  Austria,  this  authorization  is  issued  by  the  District 
Administrative  Authority,  if  the  business  will  be  closed  or  relocated.  The  authorization  also  entails 
the revocation of the respective commercial licence for the business after the end-of-business sale 
has  lapsed.  When  applying  for  such  an  authorization  the  retailer  has  to  provide  extensive 
information  on the business  and  on the reasons  for  the end-of-business  sale including  proof  of  its 
necessity. The information must comprise: 

  Details about the respective products and their quantity, quality and value; 
  The location of the end-of-season sale; 
  The period of the end-of-season sale;  
  The  reasons  including  proof  for  the  end-of-season  sale,  e.g.  decease,  business  closure, 

relocation.  

The  District  Administrative  Authority  needs  to  request  an  opinion  of  the  Chamber  of  Commerce 
before deciding on the authorization within a month after receipt of the application. In 2016 Austria 
introduced  exceptions  in  case  of  an  emergency  situation,  e.g.  water,  fire  or  storm  damage, 
prohibiting  the  regular  operation  of  the  shop.  Only  if  such  an  event  can  be  substantiated,  an 
authorization is not necessary and a notification to the relevant municipality is sufficient. In France, a 

73 

 
 
 
retailer  must  be  authorized  by  the  relevant  municipality  for  end-of-business  sales.  Legitimate 
reasons include the closure, temporary suspension, change of activity, change in the legal form of a 
company,  relocation  and  renovation  of  the  business.  If  a  retailer  cannot  prove  any  of  the  above-
mentioned  grounds  an  end-of-business  sale  will  not  be  approved,  but  it  remains  possible  for  the 
retailer to engage in regular sales promotions. When notifying the retailer must provide, inter alia, a 
detailed inventory of the goods subject to the sale and which must be stored on the premises, the 
period  of  the  sale  and  the  nature  of  the  goods  concerned.  The  end-of-business  sale  must  be 
accompanied or preceded by relevant advertisement.  

In  Greece,  retailers  have  to  request  a  licence  from  the  responsible  local  court  to  be  permitted  to 
offer  end-of-business  sales.  It  is  only  permitted  if  the  business,  or  parts  of  it,  will  be  definitely 
terminated or in case of bankruptcy. During the whole end-of-business sale, and explicitly within the 
first five days of each month, the retailer has to provide the chamber of commerce with inventory 
lists setting out the remaining goods.  

Compared  to  Austria,  France  and  Greece  the  regimes  in  Italy,  Romania,  Portugal  and  some 
autonomous communities in Spain are less restrictive by requiring end-of-business sales only to be 
notified  to  the  municipality  before  the  envisaged  start  depending  on  the  reasons,  e.g.  business 
closure, renovations and transfer or conversion of the businesses, for the end-of-business sale. The 
notification  must  include  various  information,  e.g.  a  detailed  inventory  of  the  products  to  be  sold 
which must be located on the premises, a proof of the declared reason or documents confirming the 
origin of the products.  

In Belgium, Croatia, Latvia and the remaining autonomous communities in Spain retailers planning to 
engage in or advertise an end-of-business sales need to self-assess whether they fulfil the conditions 
to be permitted to do so. In case of an investigation the retailers must have proof that a legitimate 
reason has existed or continues to exist with respect to their business. Such legitimate reasons can 
include,  inter  alia,  business  closure,  renovations,  relocations,  retirement  or  force  majeure.  The 
retailers  can  only  offer  products  that  have  been  part  of  the  stock  at  the  time.    While  the  other 
Member States in this category apply all rules indistinctively to on-line and off-line retailers or it is 
not  conclusively  resolved  whether  the  restrictions  are  covering  e-commerce,  a  difference  in 
treatment  can be found in Croatia requiring similar to the rule for end-of-business sales explained 
above only brick-and-mortar retailers to highlight the reduced and the regular price when offering 
sales promotions or discounts. Contrary, Portugal recently broadened the scope of its rules to also 
ensure their application to distance and off-premises sales. 

Also the duration of the end-of-business sales can be limited. For example, in Bulgaria, Belgium and 
Greece, it cannot exceed 6 months. 

Restrictions on sales below cost  

A sale below cost is a practice whereby a retailer sells products at less than the costs of manufacture 
or purchase. The main reasons for retailers to sell below cost are, inter alia, to increase its sales, to 
have a competitive advantage, to improve its market share or to free itself from certain products.  

With respect to sales promotions and discounts directed towards consumers the ECJ has taken the 
view that, in so far as that provision pursues objectives relating to consumer protection, the UCPD 

74 

 
 
precludes  any  national  provision  establishing  the  presumption  of  unlawfulness  and  prohibiting, 
generally and pre-emptively, sales below cost without verification of their unlawfulness and without 
providing an appropriate justification.186  

Seven Member States187  have specific restrictions on sales below cost which go beyond competition 
law.  While  only  Portugal  has  an  outright  ban  of  sales  below  cost  linked  to  sales  promotions  and 
discounts,  the  other  restricting  Member  States  also  preclude  sales  below  cost,  subject  to  varying 
methodologies for calculating cost, but allow for certain exceptions. These exceptions either relate 
to  specific  circumstances,  e.g.  with  respect  to  perishable  goods,  end-of-season  sales  and  end-of-
business  sales,  or  if  particular  conditions  are  met,  e.g.  a  certain  limit  to  the  occurrences  or  the 
duration  of  sales  below  cost,  specific  quantities  permitted  to  be  subject  to  such  sales  or  a 
notification regime as in Italy. 

In 2004, Luxemburg envisaged to support the growth of the national, at that time, underdeveloped 
e-commerce  sector  by  excluding  on-line  retailers  from  the  ban  on  sales  below  cost.  Luxemburg 
repealed the prohibition to sell below cost likewise for off-line retailers as part of the recent 2016 
reform. Greece also decided to abolish restrictions on sales below cost in 2012. 

While the other Member States in this category apply all rules indistinctively to on-line and off-line 
retail, Italy explicitly excludes e-commerce from its restrictions on sales below cost.  

186 Order of 7 March 2013, Euronics Belgium CVBA v Kamera Express BV and Kamera Express Belgium BVBA, C-
343/12, EU:C:2013:154. 
187 Belgium, Croatia, France, Italy, Portugal, Romania, Spain. 

75 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure 35: Member States applying restrictions on sales below cost  

Source: information collected from Member States and through dedicated studies 

Public policy objectives pursued by Member States 

Different  justifications  are  advanced  by  Member  States  for  regulating  sales  promotions  and 
discounts. The three main justifications are fair competition between retailers, clarity for consumers 
and consumer protection, and to address unfair trading practices between suppliers and retailers.  

Of particular interest is how the respective restrictions contribute towards achieving these envisaged 
public policy objectives. In this respect, there appears to be a lack of assessment as to the positive or 
negative effects of restrictions when implementing or reviewing restrictions on sales promotions and 
discounts. The Member States with such measures have not provided any information or data on the 
impact of the identified rules on, inter alia, quality, pricing or the availability of offers. In addition to 
that,  Member  States  pursue  the  same  public  policy  objectives  with  contradicting  policies.  Some 
Member  States  want  to  achieve  the  envisaged  goals  by  liberalizing  national  rules  on  sales 
promotions and discounts, while others pursue the same aims by imposing stricter national rules.  

At the same time, the retail landscape has evolved to an extent that is not comparable anymore to 
the  brick-and-mortar  retail  environment  for  which  most  of  the  rules  on  sales  promotions  and 
discounts have been introduced. Rules that might have been fit for purpose for traditional retail are 
less likely to achieve the desired effect in today's retail environment, in particular when considering 
the  technical  developments  of  the  digital  age.  Retailers  need  the  freedom  to  adapt  to  changing 
consumer  shopping  preferences,  shifting  work  environments  and  the  increased  competition  from 

76 

 
 
 
 
on-line  retail.  More  flexible  and  liberal  rules  on  sales  promotions  and  discounts  can  facilitate  this 
necessary adaptation ultimately allowing consumers to benefit from more price reductions by saving 
money.  

Economic impact 

Sales promotions and discounts are marketing and pricing tools commonly used by retailers. From 
an  economic  perspective  these  tools  can  serve  different  purposes.  They  can  be  used  as  means  to 
launch  new  products  or  services  on  the  market,  to  attract  customers,  to  establish  a  competitive 
advantage and to increase the market  share. Additionally, engaging in sales promotions can be an 
efficient way to clear stock to be able to replenish with new or fresher products. 

The OECD has continuously measured the impact of regulating sales promotions and discounts in its 
Product Market Regulation Indicator.188 In a recent report on Greece the OECD concluded that such 
rules  limit  retailers'  ability  to  optimise  their  stock,  to  correspond  to  their  customers'  needs  and, 
more  generally,  to  freely  choose  their  marketing  and  pricing  strategy  for  maximizing  profits.  In 
particular, the OECD inferred that fixing periods for end-of-season sales seems to provide insufficient 
flexibility to meet the specificities of different regions. For example, retailers established in touristic 
areas may consider offering end-of-season sales as more profitable after a holiday season instead of 
during the holiday season. The inherent inflexibility of fixed end-of-season sales periods might harm 
consumers'  economic  interests,  if  not  in  line  with  changing  consumer  behaviour  or  preferences. 
Therefore,  the  OECD  recommended  that  the  national  legislation  in  Greece  should  not  impose  the 
dates for end-of-season sales, but rather should confer the power to decide on offering such sales to 
the retailers.189   

Following  OECD’s  recommendations,  Greece  liberalized  the  regulations  on  sales  promotions  and 
discounts to some extent by introducing local intermediate sales periods. The total overall economic 
benefit  for  Greece's  economy  from  this  reform  has  been  estimated  to  be  740  million  of  euros  in 
increased annual turnover.190 

Similarly,  the  OECD  has  recommended  to  France  to  abolish  fixing  end-of-season  sales  periods  by 
national law to improve competition and to allow more flexibility for retailers.191 

On sales below cost, a number of studies have concluded that forbidding them generally generate 
negative economic effects. In particular, the OECD argues that sales below cost laws do not cause a 
decline in the market share of high price, low volume retailers. Countries without sales below cost 
laws continue to  have a variety of retailers including small, local retailers. The concerns about  the 
cost  of  sales  below  cost  laws  for  consumers  appear  to  be  economically  sound  and  empirically 
supported. First and foremost, such laws are likely to result in consumers paying higher prices.192 

188OECD, Product Market Regulation 2013;  
http://www.oecd.org/economy/growth/indicatorsofproductmarketregulationhomepage.html. 
189 OECD Competition assessment review on Greece, 2013. 
190 OECD Economic surveys, Greece, 2016. 
191 OECD Economic surveys, France, 2015. 
192 OECD Resale below cost laws and regulations, OECD Journal: Competition law and policy, Vol. 9/1, 2007. 

77 

 
 
                                                            
Allain  and  Chambolle  state  that  sale  below  cost  laws  enable  producers  to  impose  industry-wide 
price-floors to retailers.193 This mechanism suppresses downstream competition and finally results in 
higher prices for consumers. 

In  2008,  France  has  amended  its  law  regulating  sales  below  cost.  In  particular,  it  has  changed  the 
way the cost of a certain product is calculated, therefore affecting the threshold below which its sale 
is  forbidden.  Before  the  reform  of  2008  the  cost  of  a  product,  or  purchase  price,  was  the  price 
appearing on the invoice and included only those discounts acquired by the retailer at the moment 
the order was placed. With the 2008 reform it was possible to deduct also the discounts resulting 
from the annual sales targets and the provision of services by the retailer. A study194 concludes that 
the 2008 reform increased competition in the retail sector in France. 

E-Commerce 

Retailers  build  their  commercial  strategies  increasingly  on  a  multi-channel  approach.  Both  on-line 
retailing  in  general  and  cross-border  e-commerce  in  particular  is  expanding  rapidly.  Today, 
consumers  can  access  on-line  shops  more  conveniently,  safely  and  cheaply  -  regardless  of  their 
location. E-commerce enables retailers to extend the geographical spread of their offers throughout 
the EU increasing competition.  

Both  off-line  and  on-line  retailers  frequently  offer  sales  promotions  or  discounts,  but  they  are  an 
essential  tool  for  on-line  retailers'  success,  because  the  search  costs  are  lower  in  on-line  markets 
compared to traditional ones and price competition is fierce. It is submitted that for the majority of 
consumers a reduced price is the most appealing promotional activity offered by on-line retailers.195  

Other studies conclude that price sensitivity of consumers is higher on-line than off-line mainly due 
to the fact that on-line sales promotions are stronger signals or price reductions as well as that price 
discounts as part of loyalty programmes are more profitable on-line than off-line for retailers.196  

These findings are fortified by the ease for customers to use price comparison tools for finding the 
best  price  on-line  and  to  switch  vendors  in  today's  e-commerce  environment.  In  2014,  a  study197 
confirmed  that  74%  of  EU  consumers  have  used  a  comparison  tool  or  website  and  40%  are  using 
them at least once a month. 35% of comparison tools users replied that the use of comparison tools 
usually results in a purchase. Hence, to remain competitive in the European market on-line retailers 
must be able to offer competitive prices, if beneficial for their business.  

193 M. L. Allain, C. Chambolle (2011) Anti-Competitive effects of resale below cost laws, International Journal of 
Industrial Organisation. 
194  P.  Biscourp  (2014)  Reglementer  ou  liberaliser:  les  relations  commerciales  en  France  des  annees  1990  aux 
annees 2000. 
195 R. Becerril-Arreolan, M. Leng, M. Parlar(2013) On-line retailers' promotional pricing, free-shipping threshold, 
and inventory decisions, European Journal of Operational Research 230 (2013), p. 272.   
196  P.  Kopalle,  D.  Biswas,  P.  Chintagunta,  J.  Fan,  K.  Pauwels,  B.  Ratchford,  J.  Sills  (2009)  Retailer  pricing  and 
competitive effects, Journal of Retailing 85 (1, 2009), p. 66.  
197 ECME Consortium/Deloitte (2013) Study on the coverage, functioning and consumer use of comparison tools 
and third-party verification schemes for such tools carried out for the European Commission.   

78 

 
 
                                                            
Furthermore,  technological  developments  in  e-commerce  allow  retailers  to  design  cost-effective 
personalized  sales  promotions  for  individual  customers.198  By  combining  data  analytics  with  their 
existing  data  the  usage  of  such  targeted  promotions  can  be  increased  and  their  usage  is  growing 
steadily  -  particularly  in  e-commerce.  On-line  tools  deliver  new  sophisticated  functionalities  and 
retailers can fully and efficiently control their on-line promotional activities in real time, e.g. ending 
or  amending  a  campaign  depending  on  the  success  or  identify  well-performing  elements. 
Increasingly, retailers have introduced dynamic pricing models based on data from their on-line sales 
channels for setting prices and for offering discounts.199  

The ability to engage in targeted sales promotions and use dynamic pricing models can significantly 
improve  the  effectiveness  of  such  activities  for  the  benefit  of  both  retailers  and  consumers,  if  the 
national legal frameworks are fit for unlocking this potential and for optimizing the usage of existing 
technology. 

The vast majority of Member States does not apply, or considers applying, specific rules for on-line 
retail. They simply apply rules for 'traditional retail' equally to e-commerce despite the completely 
different business models. In a few cases, difference in treatment exists depending on the category 
of restrictions or when Member States have explicitly excluded on-line retail from the scope of their 
restrictions. Other Member States have not particularly considered the effects on e-commerce when 
adopting the restrictions on sales promotions and discounts or it is not explicitly clarified in the laws 
whether the relevant provisions are also applicable to e-commerce.  

Although  most  Member  States  state  that  they  apply  the  same  rules  it  remains  unclear  how  the 
restrictions  in  place  are  applied  to  e-commerce  in  practice  and  how  the  compliance  of  on-line 
retailers  is  monitored  and  enforced.  In  case  Member  States  do  not  apply  restrictions  to  on-line 
retailers  or  cannot  ensure  their  compliance  due  to,  inter  alia,  a  lack  of  resources  or  existing 
structures it is doubtful whether enforcing the restrictions solely against off-line retailers is a sound 
approach or whether a liberalisation of the respective restrictions would be considered.  

On-line retailers located in an unrestrictive or less restrictive Member State can have an advantage 
for  engaging  in  any  kind  of  sales  promotion,  offer  better  discounts  or  more  competitive  prices 
without being constrained. On-line retailers established in a more restrictive Member State have to 
adhere to the restrictions when considering sales promotions and discounts, e.g. fixed end-of-season 
sales periods. Consequently, offers of not or less restricted on-line retailers can be more appealing 
for  consumers  –  especially  since  cross-border  e-commerce  becomes  increasingly  attractive  for 
consumers and they are more inclined to also switch vendors cross-border. The possibility to flexibly 
and  swiftly  promote  temporary  price  reductions  is  a  competitive  advantage  in  the  European  e-
commerce  sector  considering  that  the  price  of  a  product  is  still  a  crucial  element  for  consumer 
purchase decisions. 

For on-line retailers the varying restrictions in the EU have several consequences. Firstly, they have 
to  adapt  to  different  sales  periods  and  national  regimes  on  sales  promotions  and  discounts  in  the 
Member States they want to sell in. Secondly, on-line retailers may offer different prices for identical 

198    K.L.  Ailawadi,  J.P.  Beauchamp,  N.  Donthu,  D.  Gauri,  V.  Shankar  (2009)  Communication  and  Promotion 
Decisions in Retailing, Journal of Retailing 85 (1, 2009), p. 51.  
199 D. Grewal, L. Kusum, L. Ailawadi, D. Gauri, K. Hall, P. Kopalle, J. R. Robertson (2011), Innovations in Retail 
Pricing and Promotions, Journal of Retailing 87S (1, 2011), p. 44 ff.  

79 

 
 
                                                            
products depending on which website the potential customer is visiting and ordering. Consequently, 
rolling out EU-wide actions are hampered and linked to increased costs.  

In a domestic context similar issues can arise when rules in a Member States differ between regions. 
If  retailers  follow  the  rules  of  their  actual  place  of  establishment,  they  can  be  disadvantaged 
compared to competitors established in a different less or not restrictive region. If they sell to other 
regions with varying restrictions, e.g. regarding the periods for end-of-season sales, they might risk 
being investigated and fined for not obeying the rules in the differing region.  

Considering the steady increase in on-line sales, the growth of  e-commerce and the  multi-channel 
future of modern retail it is essential to ensure a balanced and appropriate legal framework on sales 
promotions and discounts. Bearing in mind that there is a lack of assessment, information and data 
when  implementing  or  reviewing  restrictions  on  sales  promotions  it  is  uncertain  whether  the 
envisaged  public  policy  objectives  are  effectively,  adequately  and  proportionately  achieved  by 
relying  on  the  existing  restrictions.  As  a  consequence,  all  players  have  the  chance  to  seize  the 
positive  opportunities  e-commerce  offers  while  enjoying  sufficient  flexibility  and  independence  to 
meet consumers' demands and adapt to the market reality for brick-and-mortar retail.  

5.5.  Retail-specific taxes and fees  

Retailers,  as  any  other  businesses,  are  subject  to  numerous  taxes  and  fees.  Taxes  borne  by 
companies  are  mainly  the  corporation  tax,  business  rates  (or  similar  taxes)  and  social  security 
contributions  paid  by  employers.  Such  taxes,  although  often  constituting  an  important  financial 
burden, are not specific to the retail sector and hence they do not discriminate this sector against 
the  others.  However,  some  of  them  can  be  particularly  burdensome  for  retailers.  For  brick-and 
mortar  retailers  this  is  in  particular  the  case  with  the  business  rates  which  are  often  based  on 
property.  Retailers,  as  other  businesses,  are  also  tax collectors. On behalf  of  the government they 
collect  VAT,  excise  duties,  payroll  taxes  and  employees'  national  insurance  contribution,  etc.  For 
retailers engaged in cross-border e-commerce complying with VAT obligations can be burdensome 
since VAT has to be paid in the country of consumption.200 

The retail sector is a significant contributor to government revenues. The estimated 2010 total tax 
collection (taxes borne and collected) in the EU by retailers amounted to € 69 500 billion201 - figure 
36.  

Figure 36: Estimated direct taxation of retail and wholesale firms 

200 To help cross-border e-commerce, the Digital Single Market Strategy of 2015 included an action to simplify 
VAT procedures. The related legislation was adopted in December 2017 with Directive 2017/2455 amending 
Directive 2006/112/EC and Directive 2009/132/EC as regards certain value added tax obligations for supplies 
of services and distance sales of goods. 
201 SAID Business School and the University of Oxford (2014) Retail and wholesale: key sectors for the European 
economy.  

80 

 
 
 
 
  
                                                            
Source: Retail and wholesale: key sectors for the European economy; SAID Business School and the University of Oxford; Apr 
2014 

The  structure  of  the  taxes  borne  by  businesses  is  changing.  The  share  of  the  corporation  tax 
compared to other taxes has been decreasing in general in the EU.202 Meanwhile, the share of taxes 
on property (such as the business rates, particularly important for retailers, as confirmed also by the 
below UK example) in total taxation revenues increased.203  

202  The  share of taxes  on  income  and  profits  of  corporates  in  total  taxation  decreased in  most  of  the  22 EU 
countries  covered  by  the  OECD  data.  Between  2011  and  2014,  Luxembourg  had  the  biggest  average  yearly 
drop (-1 p.p.), then -0,7 p.p. in Greece, -0,4 p.p. in Finland and -0,3 p.p. in both Sweden and the UK. However, 
the share increased in some countries: e.g. by 0,5 p.p. in Latvia and Slovakia. Source: own calculations based 
on http://stats.oecd.org.  
203 The share of taxes on property in total taxation increased in 18 out of the 22 EU countries covered by the 
OECD  data.  Between  2011  and  2014,  Ireland  noted  the  highest average  yearly  growth  (+0,6 p.p.),  then  +0,5 
p.p. in Italy. In general, those shares in total taxation revenue vary across countries, ranging from 1% in Estonia 
to 13% in the UK. Source: own calculations based on http://stats.oecd.org. 

81 

 
 
 
 
 
 
                                                            
Figure 37: Taxes borne by sectors 

Source: 2016 Total Tax Contribution survey for the 100 Group; PwC; 2016 

This  trend  away  from  taxes  based  on  profits  to  taxes  based  on  people,  production  and  property 
affects in particular those running brick-and-mortar shops because people and property components 
play  such  an  important  role  in  their  activities.  Indeed,  the  share  of  taxes  paid  by  retailers  has 
increased – their share in tax revenues is higher than their share in the GDP.204 

The  retail  sector  seems  to  be  particularly  burdened  with  business  taxes,  which  are  often  due  to 
regional or local governments.205 For example, a study comparing the effective tax rate (the tax paid 
as a percentage of income before corporate income tax) across different sectors concluded that this 
rate was the highest for retail.206  

Digitalisation  of  the  economy  in  many  ways  challenges  existing  tax  systems  and  governments  are 
concerned about maintaining current tax revenues. This has increased the interest in transparency 
about  where  in  particular  multinational  companies  pay  their  taxes.  Thanks  to  initiatives  of  the 
OECD207 and EU208, the transparency of the tax system is improving. Nevertheless there is a risk of an 
unbalanced  tax  burden  between  on-line  and  off-line  businesses.  This  was  also  reflected  in  the 
recommendations  of  the  High  Level  Group  on  retail  Competitiveness.  The  Group  called  for  the 
creation of a fair EU and, if possible international, level playing field as regards taxation.209   

204  According  to  the  study  Retail  and  wholesale:  key  sectors  for  the  European  economy,  in  2010  retail  and 
wholesale contribution to the total tax intake of the European business economy was 16,5%. 
205 Based on OECD data; http://stats.oecd.org/index.aspx?DataSetCode=REV.  
206  PwC  (2016)  Retail  sector:  Tax  rate  benchmarking;  surveying  49  retail  companies,  of  which  27  were 
headquartered  in  the  US;  https://www.pwc.com/gx/en/retail-consumer/pdf/Tax-rate-benchmarking-study-
retail.pdf.  
207 
http://www.oecd.org/tax/exchange-of-tax-information/.  
208 The tax transparency package adopted by the EU in 2015; in operation since January 2017. 
209 See HLG on retail competiveness report p. 4. 

the  OECD-based  Base 

example, 

Initiative 

Shifting 

Erosion 

(BEPS); 

Profit 

and 

For 

82 

 
 
 
                                                            
Regulation in Member States 

Types of taxes 

In addition to the tax burden resulting from the general tax system retailers in some countries have 
to pay specific taxes and fees which are paid only by retailers. These retail taxes can be levied on the 
basis  of  (i)  the  size  of  the  selling  space,  (ii)  turnover  or  (iii)  a  combination  of  selling  space  and 
turnover.  A  few  MS  also  have  (iv)  levies  or  fees  linked  to  retail  authorisations,  which  go  beyond 
covering purely the costs of the authorisation procedure. 

Retail-specific taxes based on the outlet size or turnover 

Taxes based on selling space can be found in some Autonomous Communities in Spain.  

In  Cataluña  retailers  exploiting  a  surface  above  2  500m²  have  to  pay  a  specific  tax  (IGEC),  with  a 
higher rate for surfaces exceeding 5000 m² and 10000 m² respectively. The IGEC is not imposed on 
collective  large  retail  establishments,  irrespective  of  their  sales  area.  Not  every  individual  retail 
establishment  having  a  sales  area  covering  2  500  m²  or  more  ultimately  pays  the  IGEC,  for  those 
which  are  garden  centres  and  those  selling  vehicles,  building  materials,  machinery  and  industrial 
supplies  are  exempt.  Furthermore,  a  60%  reduction  in  the  taxable  amount  for  the  IGEC  applies  to 
individual large retail establishments given over essentially to the sale of furniture, sanitary ware and 
doors and windows and those that are do-it-yourself stores. 

The  retail  specific  tax  applicable  in  Asturias  (IGEC)  applies  to  retail  establishments,  whether 
individual or collective, with a public display and sales area equal to or exceeding 4 000 m². Provided 
that their public display and sales area does not exceed 10 000 m², the tax is not levied on individual 
large retail establishments that solely and exclusively pursue any of the following businesses: garden 
centre, or selling vehicles, construction materials and machinery or industrial supplies.  

The  retail  specific  tax  applicable  in  Aragon  (IDMGAV)  applies  to  retail  establishments  with  public 
sales  area  above  500  m².  An  exemption  from  liability  to  pay  the  IDMGAV  applies  to  retail 
establishments whose principal business is the exclusive sale of the following products: machinery, 
vehicles,  tools  and  industrial  supplies;  construction  materials,  plumbing  materials,  doors  and 
windows,  for  sale  only  to  professionals;  nurseries  for  gardening  and  cultivation;  fittings  for 
individual,  conventional  and  specialist  establishments;  motor  vehicles,  in  dealerships  and  repair 
workshops;  and  motor  fuel.  Retail  establishments  which  are  subject  to  and  not  exempt  from  the 
IDMGAV will not actually have to pay tax if their basis of assessment (sales area + area set aside for 
other  uses  +  parking  area)  does  not  exceed  2  000  m².  The  type  of  land  on  which  the  retail 
establishment is situated is taken into consideration, by means of the site coefficient, if the tax base 
exceeds 2 000 m² and, therefore, there actually is a taxable amount. 

The  authorities  justify  the  tax  with  a  need  to  counterbalance  the  negative  impact  of  large  retail 
outlets on the territory and on the environment. 

83 

 
 
 
The  compatibility  of  these  taxes  with  the  freedom  of  establishment  and  State  aid  rules  has  been 
challenged.210   

Portugal also has a retail tax based on selling space. This tax is to be paid by owners of food or mixed 
retail  outlets  only.  The  fee  is  levied  on  large  food  retailers  (from  2000  m²  of  sales  area  upwards). 
Although  the  tax was  motivated with  the objective  to  fund  official  controls  related to  food safety, 
there is no clear link to the actual official controls of those business operators. In 2016, a Portuguese 
Court referred questions to the Court of Justice of the European Union concerning the compatibility 
of this tax with EU law.211    

A retail tax may also be based on the company's turnover. Hungary in 2014 amended its legislation 
on  the  food  chain  inspection  fee  to  introduce  effectively  a  tax  on  retailers'  turnover  from  food 
related  activities.  The  rate  was  progressive  ranging  from  0%  up  to  6%,  with  the  highest  rate 
concerning  almost  exclusively  big  foreign  retailer  chains.  The  Commission  found  that  the  tax 
involved state aid.212 Hungary suspended the legislation in 2015 and reverted to the previous version 
of the tax in order for it to comply with state aid rules.213 

Poland  in  2016  adopted  legislation  introducing  a  retail-specific  tax  similar  to  the  Hungarian  food 
inspection  fee  with  the  objective  to  increase  the  government  revenues  and  to  support  smaller 
national retailers. Over a certain turnover thresholds the tax rate  was 0,8% and 1,4% respectively.  
Companies  registering  yearly  turnover  of  less  than  204  million  PLN  (ca.  49  million  €214)  were 
excluded.  The  European  Commission  objected  also  to  this  tax  as  incompatible  with  state  aid  rules 
and  the  Polish  government  withdrew  from  collecting  the  tax.  It  has  challenged  the  Commission's 
decision.215  

In  France,  the  retail-specific  tax  combines  the  two  approaches  of  selling  space  and  turnover.  The 
French  tax  on  commercial  premises  (TASCOM)  applies  to  businesses  exploiting  a  surface  of  more 
than 400 m² and registering an annual turnover of at least € 460 000 per establishment. The actual 
surface is multiplied by a tariff which varies depending on the turnover per m². The rate of the tax is 
particularly  high  for  businesses  operating  commercial  surfaces  exceeding  2500  m².  The  French 
authorities are currently reflecting on increasing the tariffs and the scope of the tax. 

210 Pending cases C-233/16 to 237/16. In 2015, the Commission opened an infringement procedure against the 
tax  in  Cataluña.  In  2016  the  Spanish  Supreme  Court  referred  cases  to  the  Court  of  Justice  of  the  European 
Union against the retail taxes in the three Autonomous Communities mentioned above. 
211 Judgment of 26 July 2017, Superfoz – Supermercados Lda v Fazenda Pública, C-519/16, EU:C:2017:601. 
212 The Commission adopted a final State aid decision on 04.07.2016. See 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_40018 
213  The  rule  is  that  all  companies  should  be  treated  alike  so  that  the  contributions  are  levied  on  non-
discriminatory terms. A progressive rate structure of the HU tax provides a selective advantage to companies 
subject to the lower rates (for companies with a lower turnover). 
214 Based on exchange rates from June 2017. 
215  Previously  a  retail  specific  tax  was  introduced  in  2010  in  Hungary  but  it  was  withdrawn,  following  a 
judgement  of  the  European  Court  of  Justice  of  2014.  See  Judgment  of  5 February  2014,  Hervis  Sport-  és 
Divatkereskedelmi  Kft.  v  Nemzeti  Adó-  és  Vámhivatal  Közép-dunántúli  Regionális  Adó  Főigazgatósága,  C-
385/12, EU:C:2014:47. Due to a progressive rate (0,1%, 0,4% and 2,5%), companies with larger revenues had 
to pay higher taxes (expressed as a percentage of turnover).. Because the law took into account the revenues 
of  the  entire  corporate  group,  foreign  operators  could  fall  under  a  higher  rate  than  their  Hungarian 
competitors,  even  if  their  presence  in  Hungary  was  rather  small.  The  ECJ  judgement  was  based  on  the 
argument on an indirect discrimination of companies established in another Member State. 

84 

 
 
                                                            
These taxes, applicable to companies with a certain turnover or operating shops of a certain size, are 
mainly  paid  by  retailers  with  predominately  brick-and-mortar  shops  such  as  grocery  shops  (in 
particular in hypermarkets, supermarkets and discounters), clothing and footwear, furniture, electric 
and electronic goods or DIY, or department stores. 

Retail-specific fees 

In addition to annual taxes based on turnover or surface some Member States collect specific fees 
from retailers linked to retail authorisations.  

In Portugal,  there is an administration  fee for authorisation for large retail shops (=> 2000m²) and 
shopping centres of =>8000m². In 2016 the issued authorisations generated approximately 228 000 
€.  Part of  this  fee covers  the cost of  the authorisation  procedure  and  another  part  goes  to  a  fund 
designed to support modernisation of traditional retail.   

Figure 38: Member States applying retail-specific taxes or fees 

Source: information collected from Member States and through dedicated studies 

Public policy objectives pursued by Member States 

Taxes are a way for governments to bring revenue. In addition to the general fiscal objective specific 
public  policy  objectives  have  been  put  forward  for  the  retail-specific  taxes  and  fees.  They  may  be 
linked to the use of the funds collected.  

The justification of the Spanish retail taxes applicable in three Autonomous Communities, Cataluña 
Asturias  and  Aragón  (covering  ca.  21%  of  the  Spanish  population)  is  to  counterbalance  negative 

85 

 
 
 
 
 
impacts of large surfaces on urban planning and the environment. An environmental objective can 
as such justify imposing a tax in so far as the tax is not discriminatory and the objectives are pursued 
in a consistent and systematic manner. For the Spanish retail taxes, the exemptions, deductions and 
reductions from the tax however raise doubts as to whether the tax is appropriate for attaining the 
public policy  objective pursued. Retailers which are  excluded from the tax may equally impact the 
environment  and  town  and  country  planning  objectives.  In  a  legal  assessment  of  the  Spanish 
measures, improving the competitive position of small and medium size retailers could constitute an 
economic objective and as such would not qualify as a legitimate public policy objective.   

Moreover, if the reasoning behind a tax or a fee is to fund environment protection, this should not 
be achieved  via a retail-specific means. Such a financial burden should then  apply to any  operator 
which might  have an impact on the environment, in particular if the justification for the tax is the 
size of an establishment. Large establishments are not exclusive for retailers – they are also occupied 
by  other  service  providers  or  manufacturers  (e.g.  cinemas,  gyms,  indoor  playgrounds,  production 
units, etc.). 

The justification for the retail tax introduced in Poland was to increase government revenues. The 
French commercial tax has initially been designed to finance the old-age insurance schemes for craft, 
industrial and trade professions. Nowadays  the retail-specific tax is supposed to increase revenues 
for local governments, which were affected by reduction of other types of taxes (e.g. local business 
taxes). 

Specific fees charged to retailers in some countries are designed to cover the costs of the authorities' 
activity, such as food controls in Portugal and Hungary. 

An  important  aspect  of  assessing  the  impact  of  the  sector-specific  financial  burdens  on  retailers 
would be to explore whether they actually help meet those objectives.  

Economic impact 

As shown above, retail-specific taxes and fees exist, or have been planned, only in a limited number 
of  Member  States.  The  lack  of  economic  analysis  of  the  effects  of  such  taxes  is  therefore  not 
surprising.  Any  direct  link  between  retail-specific  taxes  and  fees  and  general  economic  outcomes 
(employment,  productivity  etc.)  would  be  very  difficult  to  establish.  If  the  tax  is  simply  to  provide 
funds to finance government social policy (such as family allowances), it is difficult to see why the 
costs  should  be borne  by  one  particular  sector  and  in particular  on a  sector  which actually has  an 
important impact on household expenditure.216 

The tax burden of a retail tax based on selling space is born only by brick-and mortar retail. In fact, 
all  the  retail-specific  taxes  and  fees  described  above  apply  mainly  to  the  off-line  commerce.  In 
France, Spain and Portugal, they refer to the selling space. The planned Polish tax also exempted e-
commerce  from  its  scope,  and  the  (withdrawn)  Hungarian  food  chain  inspection  fee  referred  to 

216  For  example,  the  French  TASCOM 
justification 
increased  by  50% 
http://www.fcd.fr/qui-sommes-nous/actualites-de-la-fcd/detail/commerce-et-distribution-pour-une-politique-
davenir-claire-et-ambitieuse/.  

in  2015  without  any  other 

86 

 
 
 
                                                            
stores  selling  fast  moving  consumer  goods217.  Such  exemptions  may  seek  not  to  give  foreign  e-
commerce players and advantage, but they reinforce the imbalance between tax burden for on-line 
and  off-line  and  create  complexity  for  multichannel  retailers.  Also,  taxes  based  on  selling  space 
affect mainly retailers whose business model is based on or includes operating large outlets.  

Revenues  from  taxes  based  on  selling  space  or  turnover  that  exclude  on-line  retail  are  likely  to 
decrease in the future as the share of retail turnover in general generated by e-commerce will keep 
on increasing. It is however difficult to see how the tax base could be broadened without the effect 
of favouring foreign e-commerce players. 

The  existing  retail  taxes  fall  heavier  on  big  companies  as  they  start  from  a  certain  threshold.  For 
example  in  Spain  (Aragon),  the  tax  applying  to  companies  with  stores  >  500  m²  seems  to  cover 
almost half of the most important players selling groceries as well as non-grocery products, most of 
which  are  also  foreign  retailers  (French,  Swedish,  German,  etc.).  This  might  deter  companies  from 
increasing selling space or turnover above the threshold and hamper small retailers from growing. 
Moreover, in practice the threshold might deter newcomers. In Catalonia and Asturias, the taxes on 
operators  of  stores  >  2500  m²  as  well  as  >  4000  m²  seem  to  affect  almost  exclusively  foreign 
companies.  This  may  discourage  entry  by  new  competitors  in  a  given  region,  in  particular  as  the 
thresholds are the same as for retail establishment restrictions which can lead to distortions  in the 
market structure. The planned Hungarian tax would have been borne mainly by foreign retailers.218 
This did not only result from the fact that the starting threshold and progressive rate but also from 
the  business  models  of  foreign  and  domestic  retailers.  The  tax  favoured  franchising  models 
compared to the business models used by foreign retailers.    

The  discussions  in  Poland,  when  plans  for  a  retail  tax  intensified  in  2015,  show  the  difficulties  to 
assess  the possible  impact  of  such a  tax.219  The Polish  tax was  supposed to  "protect" or  "support" 
Polish and small enterprises. One consultancy firm however estimated that the tax would be mainly 
paid  by  grocery  chains  (68%  of  the  possible  government  income  of  PLN  3,5  billion)  but  might 
nevertheless not be favourable for small retailers.220 The effect could be that the chains would try to 
move  into  the  smaller  stores  segment  or  diversify  their  organisational  structure  (franchising,  etc.). 
Also the tax could incentivise a new foreign retailer that would take over a convenience store chain 
(if this format would not  be taxed), or it could encourage a big on-line retailer to enter the Polish 
market to develop on-line groceries (provided that on-line retail is not taxed).221 

217 Although the fee applied to all food chain operators, the 2015 progressive rate structure was introduced for 
stores  selling  so-called  “fast-moving  consumer  goods”;  http://europa.eu/rapid/press-release_IP-16-
2404_en.htm. 

219  OC&C  Strategy  Consultants  and  CRIDO  Taxand  (2015)  Ocena  efektów  planowanego  podatku  od  handlu 
detalicznego. 
220 The assumptions of this assessment was based on the preliminary plan which was different than what was 
finally  adopted  in  2016.  The  preliminary  plan  referred  to  the  selling  space  (threshold  of  250  m²)  and  the 
turnover  per  shop  (over  2  million  PLN  quarterly)  as  the  criteria  to  include  retailers  from  the  tax.  It  also 
envisaged a progressive rate depending on the turnover, and excluded on-line traders from its scope. 
221 The report also concluded that in short term big retailers would increase consumer prices or try to squeeze 
the  prices  they  pay  to  their  suppliers.  Some  stakeholders  claim  that  the  latter  has  been  actually  happening 
already in 2016, in the view of the upcoming retail tax. 

87 

 
 
                                                            
 
A report, commissioned in 2015 by the Polish Organisation of Retail and Distribution (POHiD) from 
PwC,222  looked  at  possible  impacts  of  introducing  Hungarian  regulatory  solutions  in  Poland.223  The 
report  stated  that  a  direct  impact  of  Hungarian-like  taxes  and  fees  could  drive  the  retailers' 
profitability  down  to  zero.  The  average  increase  in  consumer  prices  could  amount  to  0,8  %  of  a 
basket's  value,  up  to  4,6  %  in  shops  of  400-1000  m²  (mainly  discounters,  where  the  poorer 
consumers buy). The financial burden from the restrictions depending on turnover could amount to 
0,14 – 4,69 % of turnover (depending on the segment of the market), which could force companies 
to restructure their costs, including cutting employment by 8 700 persons. 

5.6.  Sourcing  

EU  retailers  source  globally.  However,  for  certain  sectors,  such  as  food,  a  large  proportion  of 
products sold in Member States are sourced within Europe and within the internal market.224  

The  benefits  of  sourcing  within  and  throughout  the  Single  market  enables  retailers  to  take 
advantage of lower prices that may be available in other Member States and gain access to the many 
different products that are available across Europe. For retailers present in more than one Member 
State,  the  ability  to  source  centrally  or  cross-border  is  equally  important  to  the  ability  to  bundle 
volumes and create economies of scale. In addition, it can offer more efficiency in organising logistics 
such  as  deliveries.  There  is  also  a  growing  desire  of  retailers  to  reap  the  benefits  from  the  Single 
market in this way. In turn, this can result in a wider choice and lower prices for consumers.  

The  ability  of  retailers  to  source  products  cross  border  is  affected  by  both  regulatory  and  private 
barriers, either directly or indirectly. It is not just the regulations of Member States that can affect 
how  supply  chains  operate.  All  the  other  actors  in  the  chain,  be  it  the  producers,  distributors, 
retailers or consumers, also play a role in making sure the EU's single market is not partitioned along 
national borders.225  Therefore,  this  chapter  examines  how  the actions  of  both Member States  and 
private operators affect sourcing of products within Europe.  

and 

222 PWC (2015) Rynek handlu detalicznego w Polsce: Potencjalne skutki wprowadzenia węgierskich rozwiązań 
regulacyjnych dla polskich sieci handlowych. 
223  It  covered  the  Hungarian  retail  tax  (in  operation  until  January  2013),  the  tax  on  income  from 
advertisements and the progressive food inspection fee (withdrawn), the ban on Sunday opening, and other 
operational restrictions. 
224 Almost three quarters of EU food and drink exports are destined for the Single Market, Food Drink Europe -  
Data 
2017 
and 
(http://www.fooddrinkeurope.eu/uploads/publications_documents/DataandTrends_Report_2017.pdf) 
225 "An agreement which might tend to restore the divisions between national markets is liable to frustrate the 
Treaty’s objective of achieving the integration of those markets through the establishment of a single market. 
Thus, agreements which are aimed at partitioning national markets according to national borders or make the 
interpenetration of national markets more difficult must be regarded, in principle, as agreements whose object 
is  to  restrict  competition  within  the  meaning  of  Article  101(1)  TFEU"  Judgment  of  4  October  2011,  Football 
Association  Premier  League  Ltd  and  Others  v  QC  Leisure  and  Others  and  Karen  Murphy  v  Media  Protection 
Services Ltd, C-403/08 and C-429/08, EU:C:2011:631. 

Industry 

October 

Trends 

Drink 

Food 

EU 

– 

– 

88 

 
 
 
 
                                                            
5.6.1. Regulatory sourcing restrictions 

Some Member States are trying to impose obligations for retailers to source a certain share of food 
products  nationally.  Various  national  regulations  –  either  adopted  or  under  discussion  –  were 
mentioned  by  respondents  to  the  public  consultation  The  obligations  referred  to  included 
requirements to source a share of certain products  from the national market, to notify authorities 
when sourcing products from other Member States, including products already sold in that Member 
State, and mandatory support or promotion of national supply chains and domestic products. 226 

Obligations to source a certain share of products nationally and promotion of national supply chains 

In  Romania,  a  law227  was  introduced  that,  inter  alia,  requires  retailers  to  source228  51%  of  certain 
products from short supply chains. Sanctions for non-compliance are high financial penalties.229  

These measures raise concerns with respect to the freedom of movement of goods and freedom of 
establishment.230  They  could  deter  certain  retailers  from  entering  the  Romanian  retail  market  or 
extending  their  existing  network  of  shops  as  food  retailers  are  not  able  to  make  their  own 
commercial decisions as regards the consumable goods they place on offer.  

The  Bulgarian  Parliament  also  considered,  but  did  not  pass,231  legislation232  that  would  require 
retailers233 with a turnover of more than 2 million BGN to source domestically certain quantities of 
domestically  produced  products  traditional  to  Bulgaria.234  The  draft  legislation  proposed  the 
proportions would be determined by reference to the annual or seasonal turnover of fresh fruit and 
vegetables,  milk  and  dairy  products  and  meat  and  meat  products  or  as  a  percentage  of  the 
assortment  of  wines  and  spirits.  A  high  financial  penalty  up  to  10%  of  the  annual  turnover  of  the 

226  Commission  Staff  Working  Document  "Public  Consultation  on  Retail  regulations  in  a  multi-channel   
environment – Synopsis Report", SWD(2018) 237. 
227 Law 150/2016 which modifies and amends Law 321/2009 on the trade of food products. Published in the 
Official Gazette no. 534 of 15.07.2016.  
228    Requiring  products  to  be  from  basic  raw  materials  coming  from  Romanian  sources  i.e.  from  farms  and 
production  facilities  located  in  Romania.  The  law  refers  to  a  'direct  partnership',  which  is  a  commercial 
relationship  between  the  retailer  and  agricultural  cooperatives,  associations  of  agricultural  producers, 
commercial  agricultural  production  companies  or  agri-food  producers,  excluding  intermediaries,  in  which  a 
commercial contract is concluded for at least 12 months. A 'direct partnership' is equivalent to referring to a 
'national'  supplier  as  it  is  only  Romanian  producers  or  cooperatives  which  would  be  able  to  enter  into  such 
direct partnerships with retailers due to linguistic and practical arrangements. Another modification stipulates 
that the payment for fresh products shall be done to the producer within seven business days. The law could 
come into force on 1 January 2018.  
229  Between  100,000  and  150,000  lei  (approximately  EUR  25,000  to  37,000)  (Article  16(1)(a)  to  (c),  Law 
321/2009 (as amended).  
230  European  Commission  MEMO/17/234,  February  2018;  http://europa.eu/rapid/press-release_MEMO-17-
234_en.htm. 
231 On 18 October 2016, a proposal for an 'Act amending and supplementing of the Act on Food' was submitted 
to the National Assembly and pursued by the subsequent government. A vote on the draft was scheduled for 
Autumn 2017, but did not pass.  
232  Act  amending  and  supplementing  of  the  Act  on  Food  (Prom.  SG  no.  90  of  1999,  amended  SG  no.  102  of 
2003,  amended  SG  no.  70  of  2004,  amended  SG  no.  87,  99  and  105  of  2005,  …am.  SG  no.,  44  of  2016), 
proposed new Article 23a. 
233 The draft Act refers to "undertakings trading in food". 
234  Bulgarian  products  proposed  were  those  where  the  raw  materials  for  the  production  of  the  food  are 
produced in Bulgaria.  

89 

 
 
                                                            
products from the group to which the failure referred was also proposed.  235  This law, if adopted, 
would also raise serious concerns from the viewpoint of the fundamental freedoms enshrined in the 
Treaty.  

Mandatory support or promotion of domestic products 

Some  Member  States  are  attempting  or  have  attempted  to  put  in  place  mandatory  obligations  to 
support  or  promote  domestic  products.  Such  rules  are  in  principle  incompatible  with  the  EU 
fundamental freedoms. 236 

The law in Romania referred to above obliges retailers to display products, according to the country 
of origin, which would enable Romanian products to be distinguished.237  

In Slovakia, a law238 required retailers, with a turnover of more than 10 million EUR, to report to the 
Ministry and display at the entrance to stores and on their website, a biannual report showing the 
percentage of turnover from the sale of food produced in Slovakia against all food sales. Following 
the Commission intervention, these provisions were removed. 

In the Czech Republic, a law239 required retailers with a turnover of more than 5 billion CZK, to report 
to the Ministry and display at the entrance to stores a list of the top five countries from which they 
sourced food supplies. The list was top down starting with the countries with the highest proportion 
of  foodstuffs  acquired  from  such  countries  in  relation  to  total  food  turnover.  In  both  cases,  a 
financial penalty was linked to non-compliance.240 Also here, following the Commission intervention, 
these provisions were removed. 

While  such  measures  do  not  enable  consumers  to  assert  prejudices  directly  against  concrete 
imported food products, they aim, at least implicitly, to adjust consumer purchasing preferences and 
invite  consumers  to  assert  prejudices  against foreign products.241  They implicitly  aim  at  prompting 

235 At least 51% of fresh fruit and vegetables (in season) and at least 30% otherwise; at least 70% of milk and 
dairy products; at least 25% of meat and meat products (except chicken) and at least 50% of chicken meat and 
chicken meat products; at least 75% of wines and spirits (Article 3, draft 'Act amending and supplementing of 
the Act on Food'). 
236 Judgment of 24 November 1982, Commission v Ireland ("Buy Irish"), Case 249/81. 
237 Article 10(6) and 10(1), Law 321/2009 (as amended).  
238  Act No. 152/1995 Coll. on food, as amended by Act No. 36/2014 Coll (section 12a). Repealed.  
239 Czech Act No. 110/1997 Coll on food and tobacco products (as amended, in particular, by Act No. 139/2014 
Coll) (relevant provisions now repealed). 
240 In Slovakia, 100 EUR to 100,000 EUR (§28(2)(q) of Act Act No. 152/1995 Coll. on food, as amended by Act 
No. 36/2014 Coll (not in force). In the Czech Republic, up to 1,000,000 CZK (§17(11) of Czech Act No. 110/1997 
Coll on food and tobacco products (as amended, in particular, by Act No. 139/2014 Coll)(repealed)). 
241In Judgment of of 24 November 1982, Commission of the European Communities v Ireland (Buy Irish Case)  
C-249/81, EU:C:1982:402 (the Court declared in that case that a campaign, adopted by the Irish Government 
to  promote  the  sale  of  Irish  products,  could  be  considered  as  a  reflection  of  the  government's  intention  to 
substitute  domestic  products  for  imported  products  on  the  Irish  market  and  to  thereby  check  the  flow  of 
imports  from  other  Member  States.  In  Judgment  of  5  November  2002,  Commission  of  the  European 
Communities v Federal Republic of Germany, C-325/00, EU:C:2002:633, the Court declared that a scheme set 
up in order to promote the distribution of agricultural and food products made in Germany and for which the 
advertising message underlines the German origin of the relevant products, may encourage consumers to buy 
such  labelled  products  to  the  exclusion  of  imported  products  (paragraph  23).    In  Judgment  of  16  July  2015, 
Unione  Nazionale  Industria  Conciaria  (UNIC)  and  Unione  Nazionale  dei  Consumatori  di  Prodotti  in  Pelle, 
Materie Concianti, Accessori e Componenti (Uni.co.pel) v FS Retail and Others Request for a preliminary ruling 

90 

 
 
                                                            
consumers to prefer retailers who have the highest or higher percentage of domestic food on offer. 
They  also  implicitly  intend  to  encourage  the  retailers  affected  to  increase  the  percentage  of 
domestic food marketed, to the detriment of imported products, in order to attract more customers.  

Public policy objectives pursued by Member States 

In  Romania,  the  justification  for  the  sourcing  restrictions  described  above  is  stated  to  be  the 
promotion  of  Romanian  products  and  more  specifically  the  revitalisation  of  traditional  producers, 
small and family enterprises in the agricultural field.242  

In Bulgaria, the policy objective of the proposed amendments was stated to secure the interest of 
Bulgarian  farmers  against  unfair  commercial  practices  in  the  local  market  and  also  against 
unacceptable  actions  of  traders.  Furthermore,  it  states  that  the  proposed  legislation  was  directly 
geared towards improving the health of the citizens of the Republic of Bulgaria.243 

Such  objectives  are  obviously  not  legitimate  interests  which  can  be  invoked  by  Member  States  to 
justify restrictions to the fundamental freedoms. 244 

5.6.2. Territorial supply constraints (TSCs) 

The  ability  of  retailers  to  source  products  within  and  throughout  the  Single  Market  may  also  be 
affected  by  barriers  imposed  by  private  operators  in  the  supply  chain,  which  restrict  the  ability  of 
retailers to source products from a Member State of their choosing. As a result, retailers are often 
forced to source products domestically  and/or are prevented from 'parallel trading' products from 
another Member State. These types of restrictions are known as territorial supply constraints (TSCs).  

In concrete terms, this means that a retailer, based in one Member State and dealing with a multi-
national  supplier  is  not  given  the  choice  to  decide  from  which  national  entity  of  the  supplier  he 
would  preferably  source  the  desired  products  and  is  instead  referred  to  a  specific  national 
subsidiary.  The  retailer  faces  the  same  barrier  if  the  supplier  prevents  its  network  of  independent 

from  the  Tribunale  di  Milano  C-95/14,  EU:C:2015:492,  the  Court  declared  that  national  legislation  that 
prohibits, inter alia, the marketing of leather components of footwear coming from other Member States, or 
coming from non-member countries and already marketed in another Member State or in the Member State 
concerned, when those products do not bear a label indicating their country of origin is contrary to Article 34 
TFEU.  This  is  based  on  the  reasoning  that  such  requirements  enable  consumers  to  distinguish  between 
domestic and imported goods and that this enables them to assert any prejudices which they may have against 
foreign goods. Within the internal market, the origin-marking requirement not only makes the marketing in a 
Member State of goods produced in other Member States in the sectors in question more difficult, it also has 
the  effect  of  slowing  down  economic  interpenetration  in  the  European  Union  by  handicapping  the  sale  of 
goods produced as the result of a division of labour between Member States (see, further to that effect, the 
judgment of 25 April 1985, Commission of the European Communities v United Kingdom of Great Britain and 
Northern Ireland, C-207/83, EU:C:1985:161, paragraph 17). 
242 The policy objective is provided for in the rationale of the law. 
243  LE  Europe,  Spark  Legal  Network  and  Consultancy,  VVA  Consulting  (2018)  Operational  restrictions  in  the 
retail sector, study carried out for the European Commission. 
244 Judgment of 21 December 2016, AGET Iraklis, C-201/15. 

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wholesalers from delivering its products cross-border. This has consequences in terms of price and 
choice of products.  

TSCs can take different forms. They may include restrictions of quantities provided by suppliers to 
wholesalers to avoid them supplying retailers in other Member States. They may also take the form 
of  interruptions to the supply or refusals to supply retailers in other Member States, either directly 
or  for  doubtful  reasons  (e.g.  supply/transport  shortages).245  Other  practical  obstacles  to  prevent 
'parallel  trading'  include  changing  packaging  to  make  it  harder  to  sell  in  other  countries,  limiting 
foreign  retailers  access  to  rebates  and  key  products  to  prevent  them  bringing  less  expensive 
products into markets where there are higher prices,246 modifying product recipes or packaging sizes 
and  restricting  the  range  of  products  that  may  be  available  in  a  Member  State  or  for  a  type  of 
retailer, based for example, on store format.247 

Generally, the products concerned by TSCs are consumer goods under multi-national brand names 
sold in physical retail. They can be food or non-food goods and often include fast moving consumer 
goods that belong to the group of 'must-have' products shelved in the majority of supermarkets in 
those countries where the brand exists.248  

Retailers and public authorities in Austria, Belgium and Luxembourg, as well as in Spain249, Croatia, 
the Czech Republic, the Netherlands, France and Italy250have raised the issue of TSCs. Nevertheless 
these may be present in other Member States.   

Fragmentation of the Single Market 

TSCs can be considered to create anti-competitive obstacles to trade and partition the Single Market 
along national borders on price and on offer.  

Depending  on  the  competitive  pressure  at  retail  level,  wholesale  price  differences  might  translate 
into  retail  price  differences  between  EU  countries.  Through  price  discrimination,  consumers  in 
countries  with  less  competitive  pressure  are  subsidising  consumers  in  countries  with  higher 
competitive pressure.  

245  BSH  Consultants,  Presentation  to  the  High  Level  Forum  Expert Group for  the  Single Market, 9  November 
2017, provided examples as follows: (1) International sweets manufacturer who gave a written refusal to sell 
from anywhere other than the national office to a retailer, (2) International ice manufacturer who refused to 
sell to a retailer other than from the national office based on a company policy that does not support cross-
border, (3) International detergent manufacturer who refused to sell to a retailer a specific detergent due to 
marketing reasons.  
246 See Commission Press Release of 30 June 2016 at http://europa.eu/rapid/press-release_IP-16-2361_en.htm 
and  Commission  Press  Release  of  30  November  2017  at  http://europa.eu/rapid/press-release_IP-17-
5041_en.htm. 
247  Retailers'  association  and  BSH  Consultants,  Presentation  to  the  High  Level  Forum  Expert  Group  for  the 
Single  Market,  9  November  2017,  provided  an  example  of  an  international  chocolate  manufacturer  who 
refused delivery because the Austrian wholesale subsidiary only had brand rights for Austria. 
248 A leading retailer advised of 200-300 products in 2017, which are affected by TSCs.  
249  LE  Europe,  Spark  Legal  Network  and  Consultancy,  VVA  Consulting  (2018)  Operational  restrictions  in  the 
retail sector, study carried out for the European Commission 
250  Commission  Staff  Working  Document  "Public  Consultation  on  Retail  regulations  in  a  multi-channel   
environment – Synopsis Report", SWD(2018) 237. 

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Restricting retailers from supplying their stores with different products, including different versions 
of branded products available in different EU countries limits the choice given to consumers on the 
basis of their residence. In the recent 'dual quality food' discussions it was argued that TSCs can deny 
consumers the choice of a different version of a branded good.251 Retailers252 have referred to the 
constraints placed on retailers by manufacturers, who do not permit cross-border sourcing, and the 
fragmenting effect this  has on the Single Market as  a reason why the market is unable to  address 
this problem.253 

Some consumers can be affected by both price and product differences simultaneously. Consumers 
in  the  Czech  Republic,  Hungary,  Slovakia,  Slovenia  and  Poland  complain  that  they  can  in  fact  pay 
more for a branded good, which they perceive is of an inferior quality.  

Competition law may catch some scenarios of TSCs. 

Where TSCs are imposed by a dominant company, they may fall under Article 102 of the Treaty on 
the  Functioning  of  the  European  Union  (TFEU)  that  prohibits  the  abuse  of  a  dominant  market 
position.254  

If  an  agreement  between  a  supplier  and  an  independent  wholesaler  is  aimed  at  partitioning  the 
Single Market, regardless of whether the supplier is dominant, it may be regarded as a restriction by 
object under Article 101 TFEU.255 

251  Dual  quality  has  also  been  claimed  in  non-food  products  including  cars,  cosmetic  creams  and  washing 
powders. 
252 High Level Forum on a Better Functioning Food Supply Chain, 20 June 2017. 
253  The  draft  paper  ‘Towards  a  HLF  Code  of  Good  Practice  in  addressing  ‘dual  quality  food’  forming  the 
conclusions of the brainstorming session of the internal market subgroup of the High Level Forum for a better 
functioning  food  supply  chain  of December  2017,  includes  a  call on  the  European  Commission  to  assess  the 
impact  of  so  called  ‘territorial  supply  constraints’  on  consumer  choice  in  various  Member  States.  The  final 
version should be endorsed in December 2018. 
254 In British Leyland, a dominant company was found to have violated Article 102 TFEU by refusing to issue 
type certificates for vehicles that had been re-imported to the UK from the continent; the Court held that this 
refusal  manifested  ‘a  deliberate  intention  […]  to  create  barriers  to  re-importations.’  (Judgment  of  of  11 
November 1986, British Leyland Public Limited Company, Case 226/84, ECLI:EU:C:1986:421, paragraph 24); In 
Irish  Sugar,  a  dominant  company  granted  a  special  rebate  to  customers  solely  by  reference  to  their 
geographical  location  which  was  intended  to  deter  imports  of  sugar,  including  re-imports  of  its  own  sugar, 
from  a  neighbouring  Member  State  (Judgment  of  7  October  1999,  Irish  Sugar  plc  v  Commission  of  the 
European  Communities,  T-228/97,  EU:T:1999:246,  paragraph  185).  The  European  Commission  is  currently 
investigating  Anheuser-Busch  InBev  SA,  which  might  have  abused  its  dominant  position  on  the  Belgian  beer 
market  by  hindering  imports  of  its  beer  from  neighbouring  countries  (Commission  Press  Release  of  30  June 
2016,  at  http://europa.eu/rapid/press-release_IP-16-2361_en.htm  and  Commission  Press  Release  of  30 
November 2017, at http://europa.eu/rapid/press-release_IP-17-5041_en.htm). 
255  "[A]n  agreement  between  producer  and  distributor  which  might  tend  to  restore  the  national  divisions  in 
trade  between  Member  States  might  be  such  as  to  frustrate  the  most  fundamental  objectives  of  the 
Community. The Treaty, whose preamble and content aim at abolishing the barriers between States, and which 
in  several  provisions  gives  evidence  of  a  stern  attitude  with  regard  to  their  reappearance,  could  not  allow 
undertakings  to  reconstruct  such  barriers."  Judgment  of  13  July  1966  in  Joined  Cases  56/64  and  58/64, 
Établissements  Consten  S.à.R.L.  and  Grundig-Verkaufs-GmbH  v  Commission  of  the  European  Economic 
Community, ECLI:EU:C:1966:41, paragraph 340; see also Judgment of 4 October 2011 in Joined Cases C-403/08 
and  C-429/08  Football  Association  Premier  League  Ltd,  ECLI:EU:C:2011:631,  paragraph  139;  Judgment  of  6 
in  Cases  C-501,  513,  515,  519/06  GlaxoSmithKline  Services  Unlimited  v  Commission,  
October  2009 

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Similarly an agreement between a supplier and an independent wholesaler, to restrict the territory 
into which the buying party to the agreement may sell goods, is classified as a hard-core restriction 
under Article 4(b) of Regulation 330/2010 (VBER), except in a limited set of circumstances notably 
designed to enable a supplier to set up exclusive or selective distribution systems.256 However, even 
within an exclusive distribution system, bans on passive sales outside of the allocated territory are 
prohibited.257  Similarly,  within  a  selective  distribution  system,  the  supplier  can  prohibit  appointed 
distributors from reselling to unauthorised distributors in order to protect the selective character of 
its  network,  but  must  allow  (cross-border,  both  active  and  passive)  supplies  between  appointed 
distributors and directly to end users.258 

Market  partitioning  can  also  be  achieved  by  more  indirect  means  than  explicit  export  bans  or 
destination  clauses,  e.g.  by  reducing  discounts  or  by  charging  additional  fees  in  the  event  of  sales 
outside the destination territory.259 Such indirect measures are more likely to  constitute hard-core 
restrictions prohibited under competition law if the supplier has mechanisms in place to monitor or 
verify the destination of the products in question.260 

However, there are situations which do not fall under competition law. 261 If a supplier has domestic 
subsidiaries  in  one  or  several  Member  States,  the  instruction  given  to  those  subsidiaries  not  to 
supply retailers located outside of their respective Member is a unilateral (intra-group) decision. This 
cannot be challenged under the competition rules referred to above, if the supplier is not dominant 
on the relevant market. This is what suppliers are exploiting. 

Certain market partitioning behaviour by suppliers is addressed in the Geo-blocking Regulation262. It 
however, does not establish a right for customers to be supplied cross-border. It also does not apply 

ECLI:EU:C:2009:610, paragraph 61;  Judgment of the Court of Justice of 16 September 2008 in Joined Cases C-
468/06 to C-478/06 Sot.Lélos kai Sia and Others, ECLI:EU:C:2008:504, paragraph 65.  
256 Commission Guidelines on vertical restraints, OJ C 130, 19.05.2010, p. 1 (Vertical Guidelines), paragraph 51.   
257 Article 4 b)(i) of the VBER and paragraph 51 of the Vertical Guidelines. "Passive" sales mean responding to 
unsolicited requests from individual customers including the delivery of goods or services to such customers. 
General  advertising  or  promotion  that  reaches  customers  in  other  distributors'  territories  but  which  is  a 
reasonable  way  to  reach  customers  outside  those  territories,  for  instance  to  reach  customers  in  one's  own 
territory,  are  considered  passive  selling  (paragraph  51  2nd  indent  of  the  Vertical  Guidelines).  This  would 
include,  for  example,  the  operation  of  a  general  (non-targeted  or  territory-specific)  website  which  triggers 
customer requests from outside the territory.  
258 Article 4 (c) and (d) of the VBER and Vertical Guidelines, paragraphs 55-56. 
259For the exclusion from a bonus system, see Judgment of the General Court of 9 July  2009, Case T-450/05 
Automobiles  Peugeot  SA,  Peugeot  Nederland  NV  v  Commission,  ECLI:EU:T:2009:262,  paragraph  47.  See 
paragraph 50 of the Guidelines on Vertical Restraints, C 130 of 19.5.2010, p. 1. In the  DUC/Dong case a use 
restriction under which the buyer had to report to his suppliers the volumes sold to certain customer groups in 
order to benefit from a special price formulae, has been considered such a hard-core restriction. The case was 
settled between the Commission and the parties, IP 03/566.   
260 Commission Guidelines on vertical restraints, OJ C 130, 19.05.2010, paragraph 50 (Vertical Guidelines). 
261  On  31  May  2022,  the  validity  period  of  the  Commission  Regulation  relating  to  the  exemptions  of  certain 
categories of vertical agreements and concerted practices will end (Regulation No. 330/2010 of 20 April 2010 
on the application of Article 101(3) TFEU). It will need to be reviewed before its renewal. The accompanying 
Commission  Guidelines  on  vertical  restraints  will  also  need  to  be  reviewed  at  that  time.  The  Geo-blocking 
Regulation enables customers to benefit from the same conditions as those customers located in the place of 
supply, for example, if they arranged collection of a delivery themselves. However, it excludes purchases for 
subsequent resale from its scope and would not apply if a supply contract is individually negotiated.    
262 Regulation on addressing unjustified geo-blocking and other forms of discrimination based on customers’ 
nationality, place of residence or place of establishment within the internal market and amending Regulations 

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to retailers who wish to buy goods and collect them at the supplier’s premises or organise delivery 
themselves. This is because it only applies to customers who acquire goods for the sole purpose of 
end use263, which excludes customers purchasing goods for subsequent resale264, and where they do 
so in the absence of an individually negotiated agreement for the supply265.  

Objectives pursued by suppliers 

Reasons  given  for  TSCs  include  logistical  optimisation  of  distribution,  higher  costs  in  different 
markets, different demand in different countries and tax reasons.  

Stakeholders  raise several  reasons  for using  TSCs  to  maintain  different prices  in different  Member 
States.  These  include  wholesale  price  differences  on  the  grounds  of  different  levels  of  consumer 
purchasing power/price elasticity; different consumer preferences and brand perceptions; different 
market  positions  for  the  same  product  in  different  markets,  e.g.  lower  wholesale  prices  may  be 
charged to grow comparatively lower market shares in one market or enter a new market; different 
labour  and  advertising  costs;  and  exchange  rate  fluctuations  (if  at  least  one  of  the  compared 
countries is outside the euro area).  

However, where a supplier deliberately pursues a strategy to prevent retailers from buying products 
at  lower  prices  from  another  Member  State,  this  results  in  artificial  price  differences  between  the 
partitioned  national  markets.  Such  partitioning  and  such  an  artificial  price  difference  to  which  it 
gives rise are generally not compatible with the Single Market.266 Such a strategy may also result in 
unjustified limitations of consumer choice.  

Economic impact 

A number of studies calculated the substantial benefits for the EU resulting from a completion of the 
internal  market.267  Introducing  barriers  to  the  free  movement  of  goods  would  pose  a  threat  to 
reaping these benefits.  

Retailers  that  complain  about  restrictions  on  their  ability  to  freely  source  products  in  the  Single 
Market consider that they have a negative consequence on their business.  TSCs can have negative 
effects  on  prices,  product  range  and  profit  margins  but  also  on  quality,  delivery  time  and  product 

(EC) No. 2006/2004 and (EU) 2017/2394 and Directive 2009/22/EC (Regulation (EU) 2018/302 of 28 February 
2018) (O.J. L 60, 2.3.2018, page 1) (Geo-blocking Regulation), which clarifies certain situations where different 
treatment  cannot  be  justified  under  Article  20(2)  of  the  Services  Directive.  Geo-blocking  is  a  discriminatory 
practice  that  prevents  online  customers  from  accessing  and  purchasing  products  or  services  from  a  website 
based  in  another  Member  State.  It  also  occurs  when  certain  traders  apply  different  general  conditions  of 
access to their goods and services with respect to such customers from other Member States, both online and 
offline. The new rules, which shall enter into force by the end of 2018, will address unjustified geo-blocking in 
the sale of goods (without physical delivery), the sale of electronically supplied services and the sale of services 
provided in a specific physical location.   
263 Both consumers and undertakings (Article 2(13) of the Geo-blocking Regulation). 
264 Recital 16 of the Geo-blocking Regulation. 
265 Article 2(14) of the Geo-blocking Regulation.  
266 Judgment of 4 October 2011 in Joined Cases C-403/08 and C-429/08 Football Association Premier League 
Ltd, ECLI:EU:C:2011:631, paragraph 115 
267 European Parliament, Mapping the cost of non-Europe 2014-2019, 2015; European Parliament, The cost of 
non-Europe in the single market, 2014. 

95 

 
 
                                                                                                                                                                                         
characteristics. Only a limited number of companies seem able to counter or remedy the impact of 
TSCs. 

Replying to the Commission open public consultation, the majority of retailers subject to TSCs stated 
that they have negative consequences on their business. Retailers complain that they are not able to 
take advantage of the opportunities the Single Market offers. It undermines their ability to compete, 
because  they  cannot  source  the  same  products  under  similar  conditions  as  their  competitors, 
especially  cross-border.  The  restrictions  impede  the  positive  effects  the  economics  of  scale  for 
sourcing  might  offer  and  reduce  the  attractiveness  of  cross-border  activities.268  This  also  restricts 
physical retailers' abilities to compete with on-line retailers. 

For  consumers  TSCs  concerning  different  versions  of  branded  products  restrict  the  choice  of 
products  available  to  them.  Also  higher  wholesale  prices  may  translate  into  higher  consumer 
prices.269 

Suppliers (mainly of consumer goods under multi-national brand names) argue retailers will continue 
to  reflect  brand  strength  in  retail  prices,  which  means  that  any  cost  savings  achieved  shall  not  be 
passed  onto  consumers.270  Retailers  on  the  other  hand  argue  that  they  operate  in  a  business 
environment  which  means  they  will  pass  on  savings,  to  retain  customers  and  gain  a  competitive 
advantage.271 Similarly, ECB studies272 have shown that a higher concentration of retailers (including 
through buying alliances) at national level and the related increase in bargaining power is beneficial 
for consumers as lower prices are passed on. 

5.7.  Contractual practices of modern retail 

Fair trading practices in the supply chain support a proper functioning of the retail sector.273 As the 
retail and processing segments of the food supply chain in particular, have witnessed an increasing 
concentration across Member States, as well as globally. As a result bargaining power imbalances in 
trade  relations  between  the  actors  in  the  chain  have  led  to  potentially  unfair  trading  practices 

268  Commission  Staff  Working  Document  "Public  Consultation  on  Retail  regulations  in  a  multi-channel   
environment – Synopsis Report", SWD(2018) 237. 
269 Further investigation into the price differences was called for by BEUC at the High Level Forum on a Better 
Functioning Food Supply Chain, 6 December 2017. This was also supported by EuroCommerce. 
270 RBB Economics (2013) Territorial supply constraints: the economic arguments; 
http://www.aim.be/uploads/meeting_documents/RBB_AIM_Report_April_2013.pdf. 
271 M. Corstjens and R. Steele (2008) An international empirical analysis of the performance of manufacturers 
and retailers, Journal of Retailing and Consumer Services 15 (2008) 224-236. 
272 European Central Bank (2014) Retail market structure and consumer prices in the Euro Area; 
http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1744.en.pdf, See also European Central Bank (2014) 
Within- and cross-country price dispersion in the Euro Area; 
http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1742.en.pdf. 
273  This  has  been  recognised  by  the  Supply  Chain  Initiative  (2011)  for  example,  in  their  list  of  what  are 
considered good business practices (e.g. use of written agreements, no unilateral changes in contract terms, 
not revealing or misusing confidential information etc.). 

96 

 
 
 
 
                                                            
(UTPs).274    This  has  led  to  many  Member  States  introducing  regulations  to  tackle  what  are 
understood to be UTPs.275 

Business  models  of  retailers  and  their  suppliers  have  evolved  greatly  over  the  last  few  decades, 
meaning  suppliers  and  retailers  have  discovered  opportunities  for  collaboration,  beyond  a  pure 
selling  and  purchasing  relationship,  which  are  mutually  beneficial.  These  are  referred  to  as 
commercial practices of modern retail. Examples of such practices may include: joint planning and 
management  of  promotional  activities,  collaborative  product  launches,  better  demand  forecasting 
and numerous activities relating to optimised supply chain management.  

However,  some  have  expressed  concern276  that  ambiguity  in  defining  and  clearly  understanding 
what  practices  would be  penalised  under  regulations  imposed  to  proscribe  UTPs  could reduce  the 
likelihood that mutually beneficial transactions could take place.  This chapter therefore, focuses on 
national  regulations  limiting,  whether  directly  or  indirectly,  retailers’  freedom  to  decide  on  using 
commercial practices of modern retail as part of their business operations that can offer advantages 
for both retailers and suppliers.  

In  July  2014,  the  Commission  adopted  a  Communication  on  tackling  UTPs  in  the  business-to-
business food supply chain.277 

The Communication did not foresee regulatory action at EU level and did not prescribe a single 
solution to address the issue of UTPs. It encouraged stakeholders and Member States to tackle 
UTPs in an appropriate and proportionate manner, taking into account national circumstances 
and best practice. It also encouraged operators in the European food supply chain to participate in 
the Supply Chain Initiative (SCI), a voluntary scheme aimed at promoting best practices and reducing 
UTPs. 

Subsequently, in June 2016, a European Parliament resolution, invited the European Commission to 
submit a proposal for an EU-level framework concerning UTPs.278 

In September 2016, the European Economic and Social Committee published a report calling on the 
Commission  and  the  Member  States  to  take  swift  action  to  prevent  UTPS  by  establishing  an  EU 

274  J.  Falkowski,  C.  Ménard,  R.J.  Sexton,  J.  Swinnen  and  S.  Vandevelde  (authors),  F.  Di  Marcantonio  and  P. 
Ciaian (editors) (2017), Unfair Trading Practices in the food supply chain: A literature review on methodologies, 
impacts and regulatory aspects, European Commission, Joint Research Centre, p. 4.  
275 UTPs can broadly be defined as practices that grossly deviate from good commercial conduct, are contrary 
to good faith and fair dealing and are unilaterally imposed by one trading partner on another. Communication 
of the European Commission of 15 July 2014, Tackling unfair trading practices in the business-to-business food 
supply chain, COM(2014)472 final. 
276 J. Falkowski et al. (2017), p. 9.  
277  Communication  of  the  European  Commission  of  15  July  2014,  Tackling  unfair  trading  practices  in  the 
business-to-business food supply chain, COM(2014)472 final.   
278  7  June  2016,  European  Parliament  resolution  on  unfair  trading  practices  in  the  food  supply  chain 
(2016/2065(INI)).  

97 

 
 
 
 
                                                            
harmonised  network  of  enforcement  authorities,  to  create  a  level  playing  field  within  the  Single 
Market.279 

In  the  Council  conclusions  of  December  2016,  the  Council  of  Ministers  invited  the  Commission  to 
undertake an impact assessment with a view to proposing an EU legislative framework or other non-
legislative measures to address UTPs.280 

As  part  of  the  Commission  Work  Programme  for  2018,  the  Commission  will  propose  measures  to 
improve  the  functioning  of  the  food  supply  chain  to  help  farmers  strengthen  their  position  in  the 
market  place  and  help  protect  them  from  future  shocks.  As  such,  the  Commission  published  an 
Inception Impact Assessment relating to the initiative to improve the food supply chain on 25 July 
2017, looking at UTPs amongst others281 and launched a public consultation on 16 August 2017.282 
The  Commission  has  adopted  a  proposal  for  a  Directive  of  the  European  Parliament  and  of  the 
Council on unfair trading practices in business-to-business relationships in the food supply chain.283 

Regulation in Member States 

Member States have addressed UTPs using a variety of approaches including legislation and hybrid 
approaches that combine legislation and self-regulation284. Certain Member States have no specific 
UTP rules285 or address UTPs through self-regulatory initiatives among market participants.286 

Among  the  regulatory  approaches,  Member  States  have  chosen  different  ways  to  address 
imbalances in bargaining power or economic dependency.  

Some Member States  - Cyprus, Finland, Germany,  Austria and  Greece  - have adapted or extended 
existing regulations to account for UTPs, usually involving modifications to the country's competition 
laws.287 Others have introduced specific legislation and agencies to tackle UTPs.288 

Of  those  that  have  introduced  specific  legislation,  some  Member  States,  for  example  Germany289 
and Austria290, have very general legal provisions requiring an assessment on a case-by-case basis of 

279  Report  from  the  Commission  to  the  European  Parliament  and  the  Council  on  unfair  business-to-business 
trading practices in the food supply chain, COM(2016) 32 final.  
280  Council  conclusions  of  12  December  2016,  Strengthening  farmers'  positions  in  the  food  supply  chain  and 
tackling unfair trading practices. 
281 http://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-3735471_en. 
282 https://ec.europa.eu/info/consultations/initiative-improve-food-supply-chain_en. 
283 COM(2018) 173. 
284 In some cases (Spain, Portugal, the Slovak Republic), there is a double track including both legislation and 
codes of conduct with the latter playing a complementary role explicitly acknowledged in legislation; in other 
cases the code of conduct definition of UTPs has been incorporated by reference in legislation (Italy); in other 
cases the hybrid is private rule making and public enforcement (UK Grocery Code and Adjudicator). 
285 Estonia, Luxembourg, Malta, the Netherlands, Belgium, Denmark, Finland and Sweden. 
286  Belgium,  the  Netherlands,  Finland  and  Estonia  have  a  voluntary  platform  established  with  the  aim  of 
bringing together the different actors in the food value chain and resolving issues with UTPs internally.  
287 J. Falkowski et al (2017), p. 44. 
288  Bulgaria,  Croatia,  Czech  Republic,  France,  Hungary,  Italy,  Ireland,  Latvia,  Lithuania,  Portugal,  Romania, 
Slovakia, Slovenia, Spain and the United Kingdom. 
289  For  example,  Articles  19  and  20  of  the  Act  against  Restraints  of  Competition  address  amongst  others 
situations of economic dependency that are based on the concept of relative market power and which allow 

98 

 
 
 
 
 
 
                                                            
whether  there  is  a  significant  economic  imbalance  between  two  operators,  and  whether  the 
stronger operator abused its position to impose unfair terms or conditions on the weaker party.  

Other  Member  States,  for  example  the  Czech  Republic,  Slovakia  and  Hungary,  have  chosen  to 
introduce  more  detailed  UTP-specific  legislation.  Several  of  these  laws  contain  extensive  lists  of 
practices considered to be intrinsically unfair and thus illegal (blacklists),291 and where unfairness is 
not assessed on a case-by-case basis. In contrast, in Finland, the law replaces the notion of UTPs with 
the concept of 'good business practices'. In Poland, the relevant law combines the two by referring 
to  fair  dealing  ('good  practices')  as  well  as  having  a  blacklist  of  unfair  practices.292  Similarly,  in 
Ireland, the law, accompanied by guidelines, include a grey list and prohibits with the possibility of 
justified exceptions, certain behaviour. 293 

In  Romania,  legislation  contains  an  outright  ban  on  charging  suppliers  payments  or  fees  for  any 
services provided by retailers. Such a general prohibition does not appear proportionate as in certain 
conditions the agreement may be fair and beneficial to both parties.   

Public policy objectives pursued by Member States294 

an effective approach on a case-by-case basis. Source: A. Renda, F. Cafaggi, J. Pelkmans, P. Iamiceli and others 
(2014) Study on the Legal Framework covering Business-to-Business unfair trading practices in the retail supply 
chain carried out for the European Commission in particular Annex 1, National Reports. The information was 
updated where pertinent following Member States replies to a Commission questionnaire in November 2017. 
290  UTPs  are  covered  by  the  Competition  Act,  which  goes  beyond  the  scope  of  EU  competition  law  by 
addressing  the  abuse  of  economic  dependence,  the  Act  against  Unfair  Competition  (UWG)  and  the  Act  on 
Local  Supply  ('Nahversorgungs-Gesetz'),  which  prohibits  a  number  of  practices,  including  discrimination. 
Source: A. Renda, F. Cafaggi, J. Pelkmans, P. Iamiceli and others (2014) Study on the Legal Framework covering 
Business-to-Business  unfair  trading  practices  in  the  retail  supply  chain  carried  out  for  the  European 
Commission,  in particular Annex 1, National Reports. The information was updated where pertinent following 
Member States replies to a Commission questionnaire in November 2017.  
291 For example, in Bulgaria, the Foodstuffs Act includes a black list of prohibited UTPS in the food supply chain 
and in Croatia, the Law on Trade defines and prohibits UTPs and enumerates a number of different types of 
conduct that are specifically considered to be UTPs.  Source: A. Renda, F. Cafaggi, J. Pelkmans, P. Iamiceli and 
others (2014) Study on the Legal Framework covering Business-to-Business unfair trading practices in the retail 
supply  chain  carried  out  for  the  European  Commission,  in  particular  Annex  1,  National  Reports.  The 
information was updated where pertinent following Member States replies to a Commission questionnaire in 
November 2017.  
292 The Act on Combating Unfair Competition. Source: A. Renda, F. Cafaggi, J. Pelkmans, P. Iamiceli and others 
(2014) Study on the Legal Framework covering Business-to-Business unfair trading practices in the retail supply 
chain carried out for the European Commission, in particular Annex 1, National Reports. The information was 
updated where pertinent following Member States replies to a Commission questionnaire in November 2017. 
293 Part 6 of the Competition and Consumer Protection Act 2014 enables the Minister for Jobs, Enterprise and 
Innovation to make regulations to regulate certain practice sin the grocery goods sector. These were signed 
into law in January 2016 and entered into force on 30 April 2016. Source: A. Renda, F. Cafaggi, J. Pelkmans, P. 
Iamiceli and others (2014) Study on the Legal Framework covering Business-to-Business unfair trading practices 
in the retail supply chain carried out for the European Commission, in particular Annex 1, National Reports. The 
information was updated where pertinent following Member States replies to a Commission questionnaire in 
November 2017. 
294  A.  Renda,  F.  Cafaggi,  J.  Pelkmans,  P.  Iamiceli  and  others    (2014)  Study  on  the  Legal  Framework  covering 
Business-to-Business  unfair  trading  practices  in  the  retail  supply  chain  carried  out  for  the  European 
Commission, in particular Annex 1, National Reports. The information was updated where pertinent following 
Member States replies to a Commission questionnaire in November 2017. 

99 

 
 
 
 
 
                                                                                                                                                                                         
Most  Member  States  aim  to  protect  the  weaker  actors  in  the  supply  chain  against  operators  with 
greater  bargaining  power  from  imposing  trading  practices  that  are  generally  regarded  as  unfair. 
Some  Member  States  specifically  recognise  the  position  of  SMEs  as  particularly  vulnerable.    Other 
Member States focus on improving the efficiency and competitiveness of the food sector as well as 
empowering suppliers and strengthening their position in the market.  

Economic impact 

The economic impact of restricting contractual freedom is very hard to quantify. However, faithful 
cooperation  between  retailers  and  their  suppliers  is  key  for  business  success.  Business  models  of 
both  suppliers  and  retailers  have  evolved  over  time  and  there  are  many  examples  demonstrating 
that  collaboration  beyond  a  pure  selling/purchasing  relationship  can  be  mutually  beneficial,  in 
particular in reaching efficiency gains.  

In addition some academics295 refer to a 'rule of reason' regulatory approach which recognises that 
defining  certain  business-to-business  practices  as  UTPs  instead  of  ordinary  competitive  behaviour 
intended  to  promote  transaction  efficiency,  can  reduce  the  surplus  to  a  transaction  and  can  harm 
both parties to it.296  

5.8.  Retail Restrictiveness Indicator - results for operational restrictions 

The  operational  restrictions  pillar  is  part  of  the  overall  Retail  Restrictiveness  Indicator  (RRI)  –  the 
composite indicator developed by the Commission services and presented in section 3. It measures 
the  level  of  restrictiveness  of  Member  States.  It  is  composed  of  the  following  elements:  shop 
opening  hours,  sales  promotions,  sourcing  of  products,  distribution  channels  for  specific  products, 
financial  burden  (retail-specific  and  fees).  Details  of  operational  restrictions  in  retail  have  been 
presented in the previous sections of this document. 

The  figure  40  below  illustrates  the  Operational  pillar  of  the  RRI  composite  indicator  -  the  level  of 
limitations  and  specific  requirements  at  the  end  of  2017297.  Values  point  to  France,  Spain  and 
Romania  as  most restrictive countries.  This  is  mainly  due to  rules  on shop opening  hours,  the fact 
that the sale  of  non-prescription  medicines  is  limited  to  pharmacies  and  the  sales  promotions  can 
only  take  place  in  certain  circumstances.  In  addition,  in  Romania,  retailers  must  obey  quotas  for 
certain product categories to be sourced from a short supply chain. 

295  Falkowski,  J.,  C.  Ménard,  R.J  Sexton,  J.  Swinnen  and  S.  Vandevelde  (authors),  Marcantonio,  F.  Di  and  P. 
Ciaian (editors) (2017), Unfair Trading Practices in the food supply chain: A literature review on methodologies, 
impacts and regulatory aspects, European Commission, Joint Research Centre. 
296  Sexton  (2017)  proposes  criteria  for  this  'rule  of  reason'  approach,  which  firstly  examines  whether  the 
alleged action has a clear efficiency motivation, secondly examines if a simpler means than the alleged UTP is 
available to the accused party to extract economic surplus, and thirdly examines if the business relationship in 
question is likely to be long term, as it is unlikely a business would disrupt a long term relationship by engaging 
in a UTP. 
297  In  some  cases,  when  important  changes  took  place  after  December  2017,  the  information  has  been 
updated and taken into account in the scores.  

100 

 
 
  
 
 
                                                            
On  the  other  hand,  in  Ireland,  Estonia  and  Hungary,  conditions  for  retail  operations  are  relatively 
liberal and do not go beyond limiting distribution channels for certain products. 

Figure 40: The retail operational restrictions pillar of the RRI 

Source: own calculations based on information collected from Member States and through dedicated studies 

6.  Cost of compliance with regulatory requirements  

The  burden  of  complying  with  regulations  concerning  the  operation  of  retail  outlets  implies  a 
monetary cost referred to as 'the cost of compliance'. A commonly applied methodology to measure 
compliance  costs  is  to  accumulate  the  costs  linked  to  the  purchase  of  necessary  software  and 
equipment,  and  the  costs  linked  to  the  administrative  tasks  that  need  to  be  carried  out,  both  in-
house as well as outsourced. It should take into account additional tasks only, not the administrative 
tasks that the company would undertake regardless of regulatory requirements. The administrative 
cost is usually measured by multiplying the number of hours that an employee must spend on the 
additional administrative tasks and the cost of an hour of work of this employee. 

101 

 
 
 
 
Measuring  the  cost  for  operational  restrictions  would  require  distinguishing  the  software, 
equipment and tasks implied by such restrictions from all software, equipment and tasks required to 
comply  with  all  relevant  legislation.  This  is  very  difficult  for  companies  to  single  out  and  report, 
hence for the purpose of this analysis, the cost of retailers’ compliance with legislation in general is 
taken into account. 

Within  the  scope  of  a  dedicated  study  of  retail  operational  restrictions,298  a  survey  of  1455  retail 
companies  (of  different  size  categories,  selling  different  types  of  goods,  and  active  both  on-line 
and/or off-line) was carried out in 28 EU countries. Its results allowed the consultant to estimate the 
compliance cost in relation to company turnover. To complete the analysis, Eurostat data on wages 
in  retail  and  estimation  of  turnover  of  retail  companies  was  used.  This  approach  seems  to  have 
produced rather cautious estimations – in practice, the cost of compliance can even be higher and 
amount to a larger proportion of a company’s turnover. 

Results point to the smallest retailers to bear the highest costs compared to their turnover, both in 
relation to administrative tasks as well as costs of equipment – figures 41 to 43. 

Figure 41: Burden linked to administrative tasks, in percentage of estimated turnover, by size of firms 

Figure  42:  Burden  linked  to  costs  of  equipment  and  systems  for  compliance,  in  percentage  of 
estimated turnover, by size of firms 

298  LE  Europe,  Spark  Legal  Network  and  Consultancy,  VVA  Consulting  (2018)  Operational  restrictions  in  the 
retail sector, study carried out for the European Commission. 

102 

3.56%0.36%0.10%2.27%0.26%0.06%0.0%1.0%2.0%3.0%4.0%microsmallmediumadmin burdens  (% of estimated turnover)additionality of admin burdens (% of estimated turnover) 
 
 
                                                            
Figure 43: Total additional monetary burden as percentage of turnover, per firm size 

Source: LE Europe, Spark Legal Network and Consultancy, VVA Consulting (2018) "Operational restrictions in the retail 
sector", study carried out for the European Commission 

Companies  definitely  perceived  different  administrative  tasks  as  time  consuming,  in  particular 
completing  paperwork (forms, records, certificates) and having to keep up to date with regulatory 
changes. 

The  survey  also  asked  about  the  impact  of  a  number  of  specific  operational  restrictions299  on 
business decisions and functioning. Although most respondents considered these impacts to be low, 
for  many  the  most  impacted  areas  were  turnover  and  profits.  Retailers  selling  on-line  felt  less 
impacted.  From  other  restrictions,  not  necessarily  specific  to  their  sector,  retailers  pointed  to 
complying with consumer rights regulations in their country and providing specified information to 
consumers before purchase in a number of languages as the most burdensome. 

Among  on-line  and  mostly  on-line  retailers,  the  most  burdensome  restrictions  appear  to  concern 
consumer rights and technical product requirements. 

299 Restrictions on sales promotions, on opening hours, product-specific restrictions on selling and restrictions 
on sourcing. 

103 

1.49%0.23%0.05%0.98%0.14%0.03%0.0%0.5%1.0%1.5%2.0%microsmallmediumburdens related to equipment and systems  (% of estimated turnover)additionality of burdens related to equipment and systems  (% ofestimated turnover)3.247%0.373%0.097%0.072%0.00%0.50%1.00%1.50%2.00%2.50%3.00%3.50%micro - 942 obssmall - 339 obsmedium - 107 obslarge - 10 obs 
 
 
 
                                                            
Retailers  often  complain  about  disproportionate  enforcement  measures  (see  figure  44).  The  study 
looked  into  the  intensity  of  inspections  carried  out  by  Member  States  authorities  and  the  fines 
imposed  at  companies.  On  average,  (not  surprisingly)  larger  companies  (and  also  non-specialised 
stores  and  specialised  food  retailers)  are  inspected  more  often,  which  is  also  associated  with  a 
higher probability of a fine (see figure 45). For small companies, however, the fines received amount 
to a significantly larger share of their turnover. 

Figure 44:  Agreement with negative statements about enforcement – number of respondents 

Source: LE Europe, Spark Legal Network and Consultancy, VVA Consulting (2018) "Operational restrictions in the retail 
sector", study carried out for the European Commission 

Figure 45: Average number of inspections per firm in the last year per country and per firm size 

Source: LE Europe, Spark Legal Network and Consultancy, VVA Consulting (2018) "Operational restrictions in the retail 
sector", study carried out for the European Commission  

The  total  monetary  burden  linked  to  the  cost  of  compliance  with  relevant  regulations  vary  across 
countries  and  across  companies  of  different  sizes,  but  to  a  lesser  extent  across  different  types  of 
retailers.  As  a  percentage  of  turnover,  it  seems  to  be  the  highest  in  Portugal,  Poland,  Latvia, 
Romania, France and Austria, and the lowest in Luxemburg, Ireland, Malta, Denmark and Belgium. 

104 

0200400600Inspections are too frequentInspections are disproportionately likely to find compliance shortcomingsFines are disproportionately heavyFines are frequently incurred for minimal compliance shortcomingsThe costs to seek redress for enforcement errors are too great for many businessesFully agreeSomewhat agreeSomewhat disagreeFully disagreeDon't know1.33.22.93.23.06.71.42.91.30.81.74.22.73.02.13.72.71.02.90.91.81.85.65.66.83.01.40.6012345671.83.78.80369microsmallmedium 
 
 
 
The  overall  monetary  value  of  the  compliance  cost  borne  by  retail  firms  is  estimated  at  €26,7 
billion300, which to a large extent falls on micro companies. 

Figure 46: Confidence intervals for total monetary burdens of administrative compliance tasks and 
equipment and systems for compliance, per country, per firm size, totals in € million 

Source: LE Europe, Spark Legal Network and Consultancy, VVA Consulting (2018) "Operational restrictions in the retail 
sector", study carried out for the European Commission 

7.  Conclusions  

The functioning of the retail sector affects the whole economy. The sector contributes significantly 
to the EU GDP, represents a large share of EU employment and a large number of EU businesses.  It 
is also closely intertwined with other sectors of the economy and can have a considerable impact on 
their  performance.  It  is  also  important  for  consumers  who  spend  30%  of  their  budgets  in  shops. 
Finally,  retail  brings  the  Single  Market  to  the  EU  consumers  who  have access  to  a  wider  choice of 
products, both on-line and off-line.  

The sector is modernising at a very fast pace. Retailers serve customers through increasingly diverse 
channels. Multi-channel retail will continue to develop to meet evolving consumers' expectations.  

These  market  developments  challenge  the  role  that  European  retailers  have  played  in  brick-and 
mortar retailing. It is an opportunity for growth and expansion for many retailers, but can also be a 
challenge  for  some  of  them,  in  particular  small  traditional  businesses,  which  may  have  difficulties 
investing in and adapting to new technologies.  

The retail sector is subject to various national regulatory frameworks (at national, regional and local 
level), which can affect  the integration and efficiency of the EU retail market. Some of these rules 
amount to restrictions: some of them are contrary to EU law (be it primary or secondary), whereas 
other may  be justified if  they are  not  discriminatory,  if  they pursue  an  overriding reason  of  public 
interest  and  are  proportionate.  In  general,  Member  States'  legitimate  public  policy  objectives 
include the protection of consumers, workers, environment and town and country planning.  

Retail restrictions affect more severely off-line retailers. Regulatory frameworks have been designed 
for the off-line world. To promote multi-channel retail there is a need to provide a level playing field 
for both channels.  

300 With a confidence interval of 95%, the cost ranges between €22,6 and €30,9 billion. Source: the LE study of 
retail operational restrictions.  

105 

microsmallmediumlargeall95% CI lower21,042.4           1,149.7             150.7                 247.0                 22,589.7           point estimate 24,227.3           1,450.1             256.2                 792.9                 26,726.5           95% CI higher27,412.2           1,750.5             361.8                 1,338.8             30,863.3            
 
 
 
                                                            
Regulations on the establishment of shops have a great impact on retailers with physical presence. 
Many Member States impose stringent conditions linked to the size of shops and their location and 
burdensome procedures to establish a shop.  

Operational  restrictions  also  affect  severely  the  day-to-day  business  activities  of  off-line  retailers. 
They include regulations on shop opening hours, distribution channels for certain products, periods 
and duration of sales promotions, specific taxes and fees and the sourcing of products.  

Numerous  studies  have  demonstrated  negative  effects  of  such  barriers  on  the  functioning  of  the 
market. Restrictive and complex regulations may have a negative impact on competition as well as 
indirect effects on productivity, employment, prices and innovation. They may become a significant 
burden for businesses, discouraging them from entering the market or inducing their exit.  

Restrictive requirements concerning the establishment of new shops may have a negative impact in 
particular on market structure and dynamics. They may  influence the retailer’s decision on market 
entry,  the  location  of  the  shop,  its  size,  format  and  assortment.    Even  if  such  regulations  do  not 
prevent  market  entry  as  such,  they  may  hamper  the  firm’s  ability  to  adjust  to  consumers’ 
preferences  and  to  successfully  compete  on  the  market.  Such  regulations  may  also  have  a 
discriminatory effect on foreign companies if they target formats and sizes more commonly found 
abroad.  

Those  impacts  are  to  a  great  extent  confirmed  by  the  present  analysis.  The  economic  evidence 
analysed  and  the  links  between  the  Retail  Restrictiveness  Indicator  and  economic  outcomes  show 
that there is a significant impact of establishment restrictions on the performance of retailers as well 
as  on  consumers.  In  Member  States  with  higher  establishment  restrictions,  fewer  new  retail 
companies enter and leave the market, market concentration and consumer prices are higher.   

Stepping  up  reforms  to  reduce  regulatory  barriers  in  the  retail  sector  would  have  a  number  of 
positive economic effects. Increased competitive pressures would lead to the entry and survival of 
more efficient and innovative firms. Consumers would enjoy lower prices, more variety, innovation 
and  higher  quality.  This  would  also  have  positive  spill-over  effects  in  other  sectors  of  the  EU 
economy.  This  is  particularly  needed  in  the  wake  of  the  digital  revolution.  Retail  regulatory 
frameworks should be modernised to allow retailers to better address the challenges they are facing 
without prejudicing the public policy objectives at stake. 

In its  Communication  on a  European retail sector  fit  for  the  21st  century,  which this  Staff  Working 
Document  accompanies,  the  Commission 
identifies  best  practices  to  modernise  regulatory 
framework for retail. The best practices proposed should guide Member States' reforms to support a 
European retail sector fit for the 21st century.  

106 

 
 
 
 
8.  Annex 1: Methodology of assessment of restrictions to retail 

establishment and operations and values of the Retail 
Restrictiveness Indicator 

I. Indicators within the RRI composite indicator  

This  annex  provides  an  explanation  of  the  methodology  used  in  assessing  restrictions  to  retail 
establishment  and  operations  presented  in  the  Staff  Working  Document  underpinning  the 
Communication on best practices to facilitate retail establishment and operations. 

The objective of the analysis was to identify barriers to both retail establishment, i.e. restrictions to 
open retail  outlets,  and retail operations  across  28  Member States  and  to  assess  on  this  basis  the 
level  of  restrictiveness  of  Member  States'  regulations  in  this  area.  A  composite  indicator  (Retail 
Restrictiveness  Indicator,  RRI)  is  constructed  to  illustrate  the  different  levels  of  restrictiveness  for 
different  regulatory  aspects.  Results  of  an  analysis  of  economic  impact  of  such  restrictions  are 
presented in the Staff Working Document. 

Scope of the assessment 

The overall assessment of restrictiveness is based on the analysis of a set of aspects regulating the 
functioning  of  the  retail  sector.  The  RRI  composite  indicator  consists  of  nine  indicators  related  to 
retail  establishment  (the  establishment  pillar)  and  five  indicators  related  to  retail  operations  (the 
operations pillar). 

Establishment restrictions 

The pillar on retail establishment restrictions has been divided into two sub-pillars: conditions and 
procedures related to the establishment of shops. 

Establishment conditions sub-pillar 

1.  Specific restrictions linked to size thresholds 

The requirements for retail establishment301  are often linked to the size of the planned outlet. The 
requirements  are  typically  more  complex  and  burdensome  for  large  outlets.  This  appears  to  be 
justified as large shops have potentially more impact on the traffic, the environment, etc. However, 
the proportionality and appropriateness of such requirements may raise doubts. 

2.  Requirement to provide economic data 

301 European Commission (2015): A Single Market Strategy for Europe - Analysis and Evidence, SWD(2015)202 
final The term "authorisation" does not only refer to special retail establishment authorisations that exist in 
some Member States, but in line with the provisions of the Services Directive (article 4) it encompasses any 
procedure under which a provider or a recipient is in effect required to obtain from a competent authority a 
formal decision, or an implied decision, concerning access to a service activity, or the exercise thereof. In those 
Member States where retail establishment rules are imbedded in the planning rules, all permits, irrespective of 
the  terminology  used  at  national 
impact  on  retail  establishment,  constitute 
"authorisations" for the purpose of this assessment. 

level,  which  have  an 

107 

 
 
 
                                                            
In  the  framework  of  retail  establishment  procedure,  companies  may  be  required  to  provide 
economic data. Such a requirement is often part of a market study or an impact assessment covered 
under point 7302, however here it is assessed separately. In some cases, there is a risk that such data 
may  be  used  for  economic  need  tests  which  are  prohibited  under  Article  14  of  the  Services 
Directive.303 

3.  Existence  of  regulations  specific  to  the  location  of  the  outlet  (city  centre/  outside  city 
centre) 

Establishment  regulations  may  contain  specific  requirements  concerning  the  location  of  a  retail 
outlet.  Such  requirements  often  concern  locations  in  the  city  or  town  centre  or,  on  the  contrary, 
outside the city/town centre, in the periphery or the so-called green field locations. This reduces the 
flexibility of location choice for retailers, making establishment more difficult or even impossible in 
some cases. 

4.  Level of detail in spatial plans 

Local spatial plans define the type of constructions or activity that can be present in certain zones of 
the area they cover. These definitions can range from a rather broad “commercial use”, i.e. business 
activities such as retail, food and drink or financial services, to a very high level of detail, stating even 
the  types  of  goods  that  shops  located  in  the  area  can  sell.  The  level  of  detail  of  the  plans  (and 
permits) has an impact on the flexibility of retail establishment. This is particularly important for the 
change of use. If the plan or permit allows for a commercial use in general, it should be easier for 
owners or tenants to change the use of premises, for example from a bank to a shop. 

Establishment procedures sub-pillar 

5.  Number of permits required to establish 

The authorization to set up a retail outlet may require applying for several permits. A large number 
of permits may constitute a burden for the applicant. 

The  assessment  takes  into  account  the  permits  that  are  most  frequently  required,  such  as  the 
planning permit, the building permit, the environmental permit and the special retail authorisation. 
In  some  MS  the  procedures  are  streamlined  through  an  all-in-one  permit,  combining  all  of  the 
necessary permits or some of them into one procedure. This is reflected in the analysis. 

The  analysis  does  not  take  into  account  trade  licences,  registrations  with  a  register  of  economic 
activities, permits linked to the opening of the premises to the public or to the type of assortment 
sold (e.g. food licences). 

302  Requirement  to  provide  economic  data  is  a  qualitative  assessment.  Under  point  7  a  retail  impact 
assessment, often based on a requirement to provide economic data, counts only as one of the many market 
studies adding up to the administrative burden. 
303 Art.14.5 of the Directive 2006/123/EC (the Services Directive) prohibits making the granting of authorisation 
subject to proof of the existence of an economic need or market demand, an assessment of the potential or 
current economic effects of the activity or an assessment of the appropriateness of the activity in relation to 
the economic planning objectives set by the competent authority. This prohibition does not apply to planning 
requirements which do not pursue economic aims but serve overriding reasons relating to the public interest. 

108 

 
 
 
 
 
                                                            
6.  Number of administrative entities to be contacted, incl. the existence of one-stop- shops 

To  apply  for  an  authorisation,  companies  may  need  to  contact  several  administrative  entities.  An 
administrative  entity  taken  into  account  in  the  assessment  is  a  public  body  whose  opinion  or 
decision is required in the establishment process. It includes for example a municipality, a ministry 
or an environmental authority in case an environmental permit is required, etc. 

A large number of entities that need to be contacted may constitute a burden for the applicant. In 
some MS authorisation procedures are processed through a one-stop-shop, meaning that retailers 
submit all applications or some of them through one entity. This is reflected in the analysis. 
The analysis does not take into account company registration in a trade register or other necessary 
steps  concerning  the  setting  up  of  a  company,  but  only  steps  in  a  procedure  for  opening  of  a 
particular retail outlet. 

7.  Number  of  market  studies  and  impact  assessments  required  in  the  establishment 
procedure 

In  the  framework  of  an  authorisation  procedure,  companies  may  be  required  to  carry  out  studies 
and/or impact assessments concerning the planned setting up of an outlet. Such a requirement may 
constitute a burden for the applicant. 

The  analysis  includes  the  most  often  required  studies,  such  as  retail  impact  assessment,  impact 
assessment related to employment, traffic impact assessment as well as other impact assessment, 
e.g. related to construction. 

Only  studies  and  assessments  carried  out  or  provided  by  the  applicant  are  taken  into  account. 
Studies done by authorities themselves are excluded. 

8.  Length of procedure 

The  specificity  of  the  authorisation  process  and  the  planning  framework  in  place  differ  between 
Member States resulting in divergent deadlines for authorisation decisions. Before a retail company 
can start building a new outlet, it may need weeks or months to obtain all necessary decisions. This 
analysis focuses on deadlines for the planning, building and retail permits. In Member States where 
several  permits  are  required,  the  actual  deadlines  often  sum  up  rather  than  run  in  parallel.  In 
addition,  the  regulatory  deadlines  considered  in  this  analysis  may  differ  from  the  administrative 
practice. 

9.  Publication of decisions 

Publication  of  results  of  the  authorisation  process  does  not  only  serve  the  information  and 
transparency  purpose,  but  also  allows  future  applicants  to  better  prepare  for  the  procedure  and 
assess  the  chances  for  a  positive  decision.  In  practice,  some  authorities  make  public  both  positive 
and  negative  decisions,  some  only  positive  ones,  whereas  in  other  cases,  information  is  only 
available upon request or not accessible at all. 

109 

 
 
 
 
Operational restrictions 

1.  Shop opening hours 

Regulation of shop opening hours varies significantly between Member States. In some, this is not 
regulated at all, other restrict shop opening only on certain public holidays or/and on Sundays. Most 
restrictive countries regulate opening hours on weekdays, Sundays and public holidays. The analysis 
takes into account all these situations.  

2.  Distribution channels for certain products 

Member States control the sales of specific products, namely tobacco, alcohol and non-prescription 
medicines (sometimes known as over-the-counter or OTC medicines) in different ways. Restrictions 
may relate to the types of outlets where those products can be sold and other conditions, such as 
the hours, the age of a buyer, or the substances and their doses. At their most restrictive, these rules 
can amount to a state monopoly.  

3.  Sales promotions 

The analysis focuses on national regulations limiting retailers' freedom to decide on and to advertise 
or  announce  sales  promotions  and  discounts  as  part  of  their  business  operations  in  the  following 
four  categories:  a)  restrictions  on  end-of-season  sales;  b)  restrictions  on  discounts  (outside  fixed 
end-of-season sales periods if existing in a Member State); c) restrictions on end-of-business sales; 
and d) restrictions on sales below cost (excluding competition rules on predatory pricing). 

4.  Retail-specific taxes and fees 

In addition to the tax burden resulting from the general tax system, retailers in some countries have 
to pay specific taxes and fees which are paid only by retailers. These retail taxes can be levied on the 
basis  of  (i)  the  size  of  the  selling  space,  (ii)  turnover  or  (iii)  a  combination  of  selling  space  and 
turnover. A few MS also have (iv) levies or fees linked to retail authorisations (beyond covering its 
cost).  Corporation  tax,  business  rates  (or  similar  taxes)  and  social  security  contributions  paid  by 
employers, although often constituting an important financial burden, are not specific to the retail 
sector and hence are excluded from the analysis.  

5.  Restrictions on sourcing 

Sourcing within and throughout the Single Market enables retailers to benefit from lower prices and 
can give them access to the many different products that are available across Europe. In turn, this 
can result in a wider choice and lower prices for consumers. There are however national regulations 
and  private  barriers  which  limit  retailers'  possibilities  for  sourcing  products  cross  border.  The 
indicator takes into account the regulatory limitations only. 

II. Scoring methods  

110 

 
 
 
The  RRI  composite  indicator  consists  of  two  main  pillars:  the  establishment  and  the  operational 
restrictions.  The  first  one  weights  60%  and  the  latter  40%  in  the  overall  RRI  composite  indicator 
values. As presented in the figure below, each of the pillars is composed of a number of particular 
indicators,  which  conceptually  and  statistically  belong  to  this  pillar.  In  some  cases,  the  particular 
indicators are broken down even further and comprise a number of elements. The weights of those 
particular elements within each of the indicators are established, then the weights of the particular 
indicators within the pillar.  

Figure: Structure of the Retail Restrictiveness Indicator 

Values  assigned  to  each  indicator  range  from  0  to  6  points,  where  0  indicates  the  least  and  6  the 
most restrictive regulations. 

Indicators for the Establishment pillar304 

1.  Specific requirements for entry linked to size thresholds 

This  question  assesses  the  specific  authorisation  requirements  linked  to  the  size  of  the  planned 
outlet.  The  requirements  are  ranked  according  to  their  restrictiveness,  from  the  least  restrictive 
(rank 1) to the most restrictive one (rank 6). 

Scoring method: 

Simple notification (there is no authorisation 
procedure, the retailer notifies the establishment to 

rank 1.2 

304 Based on information gathered by the Commission in the retail establishment peer review process and in 
the  framework  of  the  "  Legal  study  on  retail  establishment  through  the  28  Member  States:  Restrictions  and 
freedom  of  establishment"  by  Holland  van  Gijzen  Advocaten.  Reviewed  through  a  consultation  of  Member 
States. 

111 

 
 
  
  
                                                            
the relevant authorities, there are no additional 
requirements) 
Notification/ Authorisation simple (the retailer needs 
to apply for an authorisation, but the procedure is 
relatively simple (e.g. does not require an opinion of a 
special committee and it is not  a retail-specific 
authorisation), when the shop complies with the 
local plans 
Retail specific authorisation or a sequential system 
for location, or a special procedure (the retailer 
needs to apply for a retail authorisation, but the 
process is relatively straightforward) 
Retail specific autorisation plus (additional 
requirements, Impact Assessments, conformity with 
plans, more complex procedure such as a special 
committee) 
Ban with  with exceptions or limited to certain shops 
or a few regions (above a certain size threshold it is in 
general not possible to establish a retail outlet, but 
derogations exist, e.g. for certain areas or certain 
types of shops) 

rank 2.4 

rank 3.6 

rank 4.8 

rank 6 

The procedures are assessed for 6 outlet size categories (in m2 of selling area): 0 - 499 m2, 500 - 999 
m2  ,  1000  -  2499  m2  ,  2500  -  4999  m2  ,  5000  -  9999  m2  and  greater  than  10000  m2  .  Results  per 
country are then computed depending on the type of requirement in each of the size categories. 

For each size category the relevant requirement is identified. If the requirement applies to the whole 
size category, 1 point is attributed; if the size threshold above which the requirement changes differs 
from the given categories, the relevant proportion of points is attributed. The final score is a sum of 
the scores given for the coverage of each requirement among the six threshold categories multiplied 
by the importance score (rank) of each requirement. 

Example: 
Member State X applies a simple notification procedure for outlets up to 400 m2 (score of 0.8 in the 
column 0-499m2), a simple authorisation for outlets between 400 and 1000 m2 (score of 0.2 in the 0-
499m2 column and score 1 in the 500-999 m2 column) and a retail specific authorisation as of 1000 
m2. 

The score is computed in the following way: 

The notification category has a coverage score of 0.13 (0.8 divided by 6, i.e. the maximum coverage 
score) multiplied by the importance score 1.2 (=0.156) 

The authorisation simple category has a coverage score of 0.2 (1 + 0.2 divided by 6) multiplied by the 
importance score 2.4 (=0.48) 

The retail specific authorisation category has a coverage score of 0.66 (4 divided by 6) multiplied by 
the importance score of 3.6 (=2.4). 

112 

 
 
The  total  score  is  a  sum  of  the  scores  for  each  requirement,  which  for  Member  State  X  equals  to 
3.04. 

Importance 
score 

Greater than 
10000 m2 

9999 - 
5000 
m2 

4999 - 
2500 
m2 

2499 
1000 
m2 

999 - 
500 
m2 

499 - 0 
m2 

Coverage 

Score 

No restriction 

Simple 
notifications 

Authorisation 
simple 

Retail specific 
authorisation  

Retail specific 
authorisation + 

Ban with 
exceptions 

1.2 

2.4 

3.6 

4.8 

6 

0 

0 

0.13 

0.156 

0.8 

1 

0.2 

0.2 

0.48 

1 

1 

1 

1 

0.66 

2.4 

0 

0 

2.  Existence of regulations specific to location  

The assessment takes into account the existence of regulatory requirements for a specific location of 
an  outlet,  mainly  city  centre  and  outside  city  centre.  The  scoring  does  not  differentiate  between 
regulations specific to city centre and regulations specific to periphery. 

Scoring method: 
Existence of requirement specific to location 
No requirement specific to location 

6 points 
0 points 

3.  Requirements for economic data 

The assessment is based on the existence of regulatory requirements to provide economic data in 
the framework of an authorisation procedure. 

Scoring method: 
Economic data is required 
Economic data is not required 

4.  Level of detail in spatial plans 

6 points 
0 points 

113 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The  assessment  distinguishes  four  situations,  to  each  of  which  a  value  is  assigned  following  the 
below pattern. 

Plans refer to types of products that can be sold 
Plans refer to types of shops that can be established, 
e.g. food or non-food 
Plans  refer  to  “retail  use”  or  distinguish  areas 
designated for larger outlets 
Plans refer to “commercial use” 

6 points 
4.5 points 

3 points 

0 points 

5. Number of permits 

The  assessment  is  based  on  the  number  of  permits  required  in  an  authorisation  procedure.  The 
analysis  is  limited  to  4  permits  most  frequently  required,  i.e.  the  planning  permit,  the  building 
permit, the environmental permit and the special retail authorisation. It also takes into account the 
existence of all-in-one processes. 

Scoring method: 
a planning permit is required in legislation 
a building permit is required in legislation 
an environmental permit is required in legislation305 
a 
special 
legislation306 
all-in-one  process  (covering  any  of  the  permits  taken 
into account in the analysis)307 

retail  authorisation 

required 

in 

is 

1 point 
1 point 
1 point 
1 point 

1 point 

The maximum number of permits is 4. The all-in-one process is not counted as an additional permit 
but  as  an  alternative  procedure.  Then  the  number  of  points  obtained  (maximum  4)  is  scaled  to  6 
points. 

6.  Number of administrative entities to be contacted 

The  assessment  is  based  on  the  number  of  entities  that  the  applicant  needs  to  contact  in  an 
authorisation procedure. It also takes into account the existence of one-stop-shops. 

Scoring method: 

Each entity that needs to be contacted308 

1 point 

305 0 points are allocated when only an environmental IA (EIA) is required 
306 Other than a trade licence 
307 It is assumed that the burden of an all-in-one process for the applicant equals the burden when one permit 
needs to be obtained, therefore 1 point 

Excluded:  trade  register  (or  trade  licensing  office),  tax  register,  entities  contacted  (consulted)  by  the 
authorities and not by the entrant directly, environmental authority in cases an EIA (not permit) is required. 
One-stop-shop equals the burden of contacting one authority. 

114 

 
 
 
 
                                                            
The country with the maximum number of entities identified obtains the maximum value, and then 
the  other  countries  obtain  a  proportionate  number  of  points,  based  on  the  number  of  entities 
observed. For example, the highest number is 3 entities and is observed for country X, which obtains 
6 points. In country Y, the retailer contacts 1 entity (e.g. a one-stop shop), and the country obtains 2 
points ((1/3)*6). 

7.  Number  of  market  studies  and  impact  assessments  required  in  the  establishment 
procedure 

The  assessment  is  based  on  the  number  of  studies  and  impact  assessment  that  an  applicant  is 
obliged  to  submit  in  an  authorisation  procedure.  It  includes  studies  most  often  required  in  such 
cases,  such  as  retail  impact  assessment,  impact  assessment  related  to  employment,  traffic  impact 
assessment as well as other impact assessment, e.g. related to construction. 

Scoring method: 

Each study or impact assessment required309 

1 point 

Then the number of points obtained (maximum 4) is scaled to 6 points. 

8.  Length of procedure 

Values are assigned proportionately to the length of certain procedures established in the regulations. 
The  length  is  accumulated  in  cases  when  certain  steps  in  the  procedure  are  sequential.  It  is  not 
accumulated in cases when certain procedures may be run in parallel. Then the longest procedure is 
taken  into  account.  The  value  for  a  given  country  is  proportionate  to  the  maximum  length  of  the 
procedure identified among all the countries, and then scaled to 6. 

For example, the longest procedure lasts 12 months and is observed for country X, which obtains 6 
points. In country Y, the procedure lasts 4 months, and the country obtains 2 points ((4/12)*6). 

9.  Publication of decisions 

This indicator assess the transparency of establishment decisions, looking at their accessibility to the 
public, e.g. whether they are published online or in local press. 

No decisions are publicly available 

Decisions are available only upon request 

 6 points 

 4.5 points 

Only positive decisions are publicly available 

 3 points 

Both positive and negative decisions are publicly available   0 points 

309 
Excluded:  environmental  impact  assessment  (given  that  these  requirements  or  covered  by  the 
Directive  2014/52/EU  )  and  requirements  to  provide  data  or  replies  to  checklists,  which  do  not  require  the 
entrant  to  carry  out  an  additional  analysis.  All  studies  and  analyses  carried  out  by  the  authority  are  also 
excluded. 

115 

 
 
 
                                                            
Indicators for the Operational pillar310 

1.  Shop opening hours 

The indicator distinguishes between weekly and Sunday /public holidays opening hours.  

Weekly opening hours 

Weekly opening hours are regulated 
Weekly opening hours are not regulated 

6 points 
0 points 

 Sunday/ public holidays opening hours 

Sunday trading is not allowed 
Shops can open on a limited number of Sundays 
per year 

6 points 
4,24-5 points 
Score is attributed within the above range of 
points depending on the number of Sundays per 
year when shops are allowed to open: 
0-5 Sundays: 5 points 
6-10 Sundays: 4,75 points 
11-15 Sundays: 4,5 points 
>15 Sundays : 4,25 points 

 

 

 

Some  shops  are  allowed  to  open  on 
Sundays (e.g. up to a certain size or selling 
particular assortment); 

3 points 

or 

all  shops  are  allowed  to  open,  but  for  a 
limited number of hours;  

or 
shops in certain parts of the country and 
major cities benefit from a more flexible 
regime than others (due to a different 
regime for tourist areas or particular 
municipal regulation) 

No restrictions on Sunday trading, but obligatory 
closure on some public holidays 

0.25-1 point 
Score is attributed within the above range of 
points depending on the number of public 
holidays per year when shops have to stay closed. 
1-5: 0,25 
5,5-10: 0,5 
10,5-15: 0,75 
>15: 1 

310  Based  on  information  gathered  by  the  Commission  through  consultations  of  Member  States  and  in  the 
framework  of  the  study  by  LE  Europe,  Spark  Legal  Network  and  Consultancy,  VVA  Consulting  (2018) 
Operational restrictions in the retail sector, carried out for the European Commission. 

116 

 
 
       
 
                                                            
In certain Member States the different types of regulation may coexist (for example, depending on 
the type, size or location of a shop a Member State may allow its regular Sunday opening or only 
on a limited number of Sundays per year). In case of such co-existing regulatory regimes Member 
States receive an average of scores of all categories they fall into. 

2.  Distribution channels for certain products 

The score is composed of scores for three types of restrictions: on non-prescription medicines (50% 
of the final score), on alcohol (25% of the final score) and on tobacco (25% of the final score). 

Non-prescription medicines 

6 points if no medicines are sold outside 
pharmacies  

50% of the final 
score 

3 points if other non-prescription medicines are 
sold outside of pharmacies or if four key types of 
medicines (aspirine, cough and cold medicines, 
digestive medicines and smoking cessation 
medicines) are sold with additional conditions (e.g. 
presence of a pharmacist)  

0 points if the four key types of medicines are sold 
outside of pharmacies without additional 
requirements 

Alcohol 

6 points if sold only through a monopoly  

25% of the final 
score 

4 if a license is needed and further requirements 
are imposed (e.g. only certain types of shops can 
hold a license)  

2 if a license is needed with no other specific 
requirements  

0 if no requirements 

Tobacco 

6 points if sold only by monopoly or equivalent 
system  

25% of the final 
score 

4 points if a license or authorisation is needed  

2 points if no license but other requirements exist 
(e.g. only sold in dedicated shops)  

0 points if no requirements 

3.  Sales promotions 

117 

 
 
 
 
Values range from 0 to 6, and are assigned according to the scheme below. The final score consists 
of  the  scores  for  each  type  of  sales  promotions:  end-of-season  sales  (30%),  end-of-business  sales 
(20%), other regulations on sales promotions (20%) and sales below cost (30%). 

Scoring method: 

End-of-seasons sales 

End-of-business sales 

Accumulation  of  points  for  any  of  the  restrictions 
observed (they might occur simultaneously): 

3  points  for  notification  obligation;  1,5  points  for 
restrictions  on  discounts  prior  to  or  outside  end-of-
season sales (e.g. on quantity or duration); 1 point for 
restrictions  on  announcing  price  reductions  prior  to 
end-of-season  sales;  0,5  point  for  prohibition  to 
discount  if  products  purchased  during  certain  period 
before  end-of-season  sales;  0  points  for  no  specific 
rules on end-of-season sales 
One of the following situations occurs: 

6 points for authorisation requirement;  
4 points for notification requirement;  
2 points for self-assessment;  
0 points for no specific rules on end-of-business sales 

Other regulations on sales promotions 

Accumulation  of  points  for  any  of  the  restrictions 
observed (they might occur simultaneously): 

Sales below costs 

0,5  point  for  any  restriction  (e.g.  obligation  on  %  of 
products value, limited duration of certain discounts, 
designated areas, etc.) 
One of the following situations occurs: 

6 points if banned completely;  
4 points if exceptions with authorisation requirement;  
2 points if exceptions;  
0 points if allowed 

4.  Retail-specific taxes and fees 

The assessment looks into the retail-specific taxes and fees, taking into account their coverage and 
the basis for calculation.  

Scoring method: 

Two different types of taxes or a double basis for 
calculation 
One type of tax/fee or a limited coverage (big stores 
or food retail) 

6 points 

3 points 

118 

 
 
 
 
 
 
 
 
 
 
 
No tax/fee 

0 points 

5.  Restrictions on sourcing 

This  indicator  distinguishes  two  situations:  when  sourcing  of  products  is  restricted,  e.g.  through 
quotas  of  products  that  must  be  sourced  domestically,  and  when  retailers  are  not  bound  by 
regulations limited the way they source products. 

Scoring method: 
Sourcing of products is restricted 
Sourcing of products is not restricted 

6 points 
0 points 

III. Values of the RRI  

Values for each indicator within the RRI for each Member State have been attributed following the 
methodology explained above. 

119 

 
 
 
 
 
 
 
Values for the Establishment pillar311 

311 Based on information gathered by the Commission in the retail establishment peer review process and in 
the  framework  of  the  "  Legal  study  on  retail  establishment  through  the  28  Member  States:  Restrictions  and 
freedom  of  establishment"  by  Holland  van  Gijzen  Advocaten.  Reviewed  through  a  consultation  of  Member 
States. 

120 

Countries Size thresholdsRegulations specific to locationRequirements for economic dataLevel of detail in planning Number of permits Number of entities to be contactedNumber of impact assessments Length of procedurePublication of decisionsScore on establishment partAustria3.36.00.00.01.22.01.53.06.02.3Belgium4.10.00.06.01.22.03.03.50.02.4Bulgaria2.40.00.00.01.22.00.02.03.01.2Croatia3.60.00.00.02.42.00.01.56.01.6Cyprus3.66.06.00.03.66.03.02.54.54.0Czech Republic2.30.00.00.01.22.00.03.04.51.3Denmark4.66.06.06.02.42.00.01.03.03.7Estonia2.40.00.00.01.22.00.00.53.01.0Finland2.96.00.00.01.22.00.01.53.01.8France2.80.00.00.02.44.00.06.00.01.8Germany3.36.06.03.01.22.03.01.56.03.5Greece3.00.00.03.02.42.00.03.30.01.7Hungary3.30.06.00.01.22.01.51.33.02.3Ireland4.76.06.00.03.64.03.01.53.03.8Italy4.36.06.03.04.86.04.52.03.04.5Latvia2.40.00.00.01.22.00.00.63.01.0Lithuania1.60.00.03.02.44.00.00.50.01.3Luxembourg3.46.06.06.03.66.03.03.03.04.5Malta3.46.06.00.02.42.03.02.63.03.3Netherlands2.46.06.03.01.22.03.01.80.03.1Poland1.90.00.03.02.44.00.01.10.01.4Portugal3.10.00.00.03.66.00.03.33.02.0Romania2.40.00.00.02.44.00.00.53.01.3Slovakia2.30.00.00.02.42.00.01.03.01.1Slovenia2.46.00.03.02.44.00.01.06.02.4Spain4.26.00.03.02.44.03.03.06.03.3Sweden2.46.00.00.01.22.00.01.33.01.7United Kingdom3.06.06.00.02.44.04.56.03.03.9 
 
 
 
 
                                                            
Values for the Operational pillar312 

312  Based  on  information  gathered  by  the  Commission  through  consultations  of  Member  States  and  in  the 
framework  of  the  study  by  LE  Europe,  Spark  Legal  Network  and  Consultancy,  VVA  Consulting  (2018) 
Operational restrictions in the retail sector, carried out for the European Commission 

121 

Countries Restrictions on shop opening hoursRestrictions on distribution channelsRestrictions on sales promotionsRetail-specific taxes and feesRestrictions on sourcingIndicator on restrictions on operationsAustria6.05.00.60.00.02.3Belgium4.83.02.60.00.02.1Bulgaria0.03.50.60.00.00.8Croatia0.01.51.70.00.00.6Cyprus6.03.00.00.00.01.8Czech Republic0.44.50.00.00.01.0Denmark0.63.00.00.00.00.7Estonia0.03.00.00.00.00.6Finland0.05.50.00.00.01.1France3.05.03.06.00.03.4Germany4.83.00.00.00.01.6Greece4.31.51.90.00.01.5Hungary0.03.00.00.00.00.6Ireland0.02.50.00.00.00.5Italy0.03.03.50.00.01.3Latvia0.03.50.60.00.00.8Lithuania0.04.00.00.00.00.8Luxembourg3.63.50.90.00.01.6Malta3.63.00.00.00.01.3Netherlands3.61.00.00.00.00.9Poland4.81.00.00.00.01.2Portugal0.01.53.76.00.02.2Romania0.43.03.00.06.02.5Slovakia0.23.50.00.00.00.7Slovenia0.04.00.10.00.00.8Spain4.34.52.13.00.02.8Sweden0.03.00.00.00.00.6United Kingdom2.41.00.00.00.00.7 
 
 
 
 
                                                            
Values for the overall RRI 

122 

Countries Establishment pillarOperations pillarRetail Restrictiveness IndicatorAustria2.332.322.32Belgium2.392.072.26Bulgaria1.150.821.02Croatia1.610.641.22Cyprus3.961.803.09Czech Republic1.300.981.17Denmark3.710.722.52Estonia1.000.600.84Finland1.801.101.52France1.803.412.44Germany3.531.562.74Greece1.671.541.62Hungary2.300.601.62Ireland3.800.502.48Italy4.531.303.24Latvia1.010.820.93Lithuania1.310.801.11Luxembourg4.501.603.34Malta3.331.322.53Netherlands3.080.922.21Poland1.421.161.31Portugal2.052.252.13Romania1.322.491.79Slovakia1.150.740.98Slovenia2.420.821.78Spain3.282.783.08Sweden1.680.601.25United Kingdom3.940.682.64 
 
 
 
 
 
9.  Annex 2: Results of the regression analysis 

Results  of  the  regression  analysis  of  possible  impacts  of  the  level  of  establishment  restrictions  on 
certain  economic  outcomes  of  the  retail  sector  point  in  the  direction  of  more  restrictions  having 
negative consequences. Due to a small number of observations (28), this analysis has its statistical 
limitations.  Figures  below  present  the  results  of  the  regression  analysis  that  have  been  taken  into 
account, while bearing in mind their limitations. 

Figure A: Results of a regression analysis of impacts of establishment restrictions on the birth rates 
for retail 

Source:  own  analysis  based  on  information  from  the  retail  establishment  study,  the  Member  States  authorities,  and 
Eurostat and Euromonitor 

Figure B: Results of a regression analysis of impacts of particular establishment restrictions  

 Source:  own  analysis  based  on  information  from  the  retail  establishment  study,  the  Member  States  authorities,  and 
Eurostat and Euromonitor 

123 

 
 
 
 
 
 
 
 
Figure C: Regression analysis - the level of restrictiveness of retail establishment and the growth in 
the selling space and the number of supermarket outlets 

Source:  own  analysis  based  on  information  from  the  retail  establishment  study,  the  Member  States  authorities,  and 
Euromonitor data 

124