The Services Directive continues to occupy minds. In the 'Appingedam' ruling - described earlier in this magazine - the Administrative Law Division of the Council of State (hereinafter: Division) ruled that restricting retail trade on the basis of the assortment carried is possible in accordance with the Services Directive, but there are still many questions about the justification requirements and different legal bases where branching restrictions must be justified. It is now clear that indirect restrictions must be justified and that the province and municipalities must consider whether refusing cooperation for a specific project makes a meaningful contribution to achieving the goals sought.
Services directive also for stores and national affairs
It is now no longer in dispute that the imposition of branching restrictions on retail trade is also covered by the European Union's Services Directive, even if it is a purely national matter. In short, the purpose of that Services Directive is to ensure that no unnecessary or disproportionate barriers may be raised in order to establish a service, including stores, anywhere in a Member State. Meanwhile, it is also no longer in dispute that protecting the livability and attractiveness of urban and neighborhood centers may be an interest that justifies imposing certain restrictions on retail sectors.
Coherent and systematic, efficient and proportional?
What may still be under discussion is whether the restrictions to be imposed are applied coherently and systematically, whether the restrictions are effective in achieving the intended goal, and whether less far-reaching measures are conceivable that may achieve the same effect. As far as the latter is concerned, a municipality or province does not have to consider all possible measures before imposing a particular one.
Extent of burden of proof government
In late 2018, rulings on Maastricht and Meijerijstad ruled that it is up to the municipality to prove that measures imposed - such as branching regulations - are effective in a general sense. The public body can do this by commissioning an analysis of the effectiveness of branching based on national, provincial and regional data.
In those same rulings, however, the Division also ruled that it must then also be made clear that those data and effects also apply to the specific municipality or location. Thus, the municipality or province cannot suffice with a general study.
Case Decathlon
On March 27, the Division issued a ruling showing that the duty to state reasons also applies to counties that actively interfere with range restrictions.
The 2014 South Holland Spatial Planning Regulation stipulated that new retail trade was only permitted within or immediately adjacent to an existing retail concentration in the centers of cities, villages and districts, within a new district-specific retail concentration in a new residential area or within a new easily accessible and centrally affected retail concentration as a result of reallocation. Retail trade in goods that in terms of the nature and size of the goods on offer is not or not well suited to the centers was allowed outside the aforementioned areas. The 2014 Spatial Regulation must be respected when adopting zoning plans. Indirectly, therefore, the 2014 Spatial Regulation had the effect of branching restrictions.
On March 27, the Division ruled on several cases initiated by municipalities and various parties against the Province of South Holland to allow the establishment of several Decathlon stores outside existing shopping centers. Indeed, the municipalities were eager to cooperate with such a plan, but the Spatial Regulation blocked that initiative.
Municipalities - despite the prohibition in the ordinance - adopted zoning plans that allowed Decathlon stores outside existing centers. The province therefore issued so-called "reactive designations" that resulted in the zoning areas and regulations required for Decathlon no longer being part of the plan.
The Division first finds that the Services Directive also covers "indirect" restrictions in provincial ordinances. As might be expected by now, the ruling then holds that it is acceptable under the Services Directive to impose restrictions on the establishment of retail trade outside city centers based on the size and nature of the assortment. However, such a restriction must be properly justified.
Deviation from zoning or provincial rules?
The Division then ruled that the province - before imposing reactive designations - should have examined whether an exemption could be granted for Decathlon's stores.
On this, the Division ruled that the province must assess whether the refusal of an exemption for a concrete initiative actually makes a meaningful contribution to achieving the goals sought, in this case the protection of city centers. If a refusal in this case does not contribute anything to this goal, permission should still be granted because the restriction would go beyond what is necessary.
This case involved reactive designations and exemptions from provincial regulations, but why should the Division rule differently when an environmental permit is requested to deviate from the zoning plan? After all, even then it must be examined whether a restriction does not extend further than necessary.
Thus, when refusing a specific initiative, a municipality or province would be wise to substantiate that the refusal makes a meaningful contribution to achieving the goal being pursued. That justification need not go so far as to require that the variance or waiver be granted if the refusal does not, in and of itself, achieve the intended purpose.
Tip for practice
We see it happen with some regularity that discussions about assortment restrictions arise, for example, because formulas are moving in a certain direction or because of seasonal changes.
If there is a discussion about whether or not to allow a particular assortment, it is important to remind the competent authority that reasoning must be based on the purpose being pursued. Thus, a request to lift assortment restrictions cannot simply be dismissed with reference to the purpose of protecting the town center.
The key question to be answered: is the protection of, say, the downtown area served to any degree by maintaining the assortment restriction for this particular case? If not, refusal is not simply obvious.
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