Date: Sept. 11, 2018
Modified November 14, 2023
Reading time: +/- 2 minutes
In the Netherlands we know no other way than that not all forms of retail are allowed in every location. The reason is that not every location is suitable for every form of retail and that municipalities often want to protect the center area. Specifically, a hardware store on the edge of town and a clothing store in the center.
But can such restrictions be imposed just like that? This question has occupied legal practice in recent years. As it turns out, if a branching restriction is to pass a judicial test, a municipality will have to do the necessary homework to justify it. After all, a restriction on branching is at odds with European regulations. This applies just as much if a restriction is placed on your assortment.
The reason for this discussion concerned proceedings on the zoning plan 'Stad Appingedam'. This zoning plan makes possible, among other things, a 'Woonplein' on the outskirts of Appingedam. This 'Woonplein' is intended as a shopping area for large-scale retail, such as furniture, kitchens and building materials. Regular retail - such as shoe and clothing stores or supermarkets - are not allowed on site.
In this case, a real estate entrepreneur has argued that by including this restriction, the city council is violating the European Services Directive by only allowing retail trade in bulky goods. He wants to establish a shoe store in the Woonplein area. The Services Directive provides guarantees that service providers, which include retail businesses, can in principle establish themselves without hindrance anywhere within the European Union.
The Administrative Law Division of the Council of State (hereafter: the Division) has seen in this statement reason to ask the Court of Justice (so-called preliminary questions) whether such branch restrictions, which are commonplace in the Netherlands, violate the European Services Directive.
On January 30, 2018, the Court of Justice answered the Division's questions in a judgment (ECLI:EU:C:2018:44). Those answers are as follows:
Those conditions include:
With these answers, it is then back to the Division to assess whether the "Town of Appingedam" zoning plan meets all the conditions.
On June 30, 2018 comes the Division's verdict (ECLI:NL:RVS:2018:2062).
All parties agree that the branch restriction does not discriminate. The Division then states that preserving the livability of the city center and preventing vacancy in inner-city areas are necessary for the protection of the urban environment and constitute compelling reasons of general interest that justify branching in the peripheral shopping area. In general terms, therefore, it can be assumed that a branching scheme quickly meets the first two conditions of Art. 15(3) of the Services Directive.
But then the Division must give an opinion on whether the industry restriction also meets the third condition, known as the proportionality test.
The Municipality argues that the branching regulation in the zoning plan is suitable for maintaining the livability of the city center and preventing vacancy in inner-city areas. The Municipality assumes that, if branching in the Woonplein is abandoned, this will result in regular retail established in the city center of Appingedam or not yet established in Appingedam settling in the Woonplein, which will lead to departure of or pressure on retail in the city center and therefore to a less attractive mix of stores in the city center area.
The Division finds this argument insufficient. It is required of the Municipality of Appingedam - but thus also of all other municipalities - that, if it wishes to justify an industry restriction, it does so on the basis of site-specific research.
In Appingedam, it will have to be demonstrated what the consequences of establishment possibilities at the Woonplein will be on the composition of the retail offer and the vacancy rate in the center of Appingedam. Only if this shows that the consequences feared by the municipality will actually occur, a sector restriction seems justified. The Division has given Appingedam six months to still provide this substantiation.
In practice, this ruling has caused quite a stir. Where previously it was assumed without question that branching restrictions are allowed, these restrictions appear to be at odds with European law.
It will not be easy for many municipalities both to justify that a branch restriction is an appropriate means to achieve a certain goal and to demonstrate that there is no other (less restrictive) method to achieve that goal. A realistic expectation therefore seems to be that a more varied retail image will emerge in the future.
Of course, the knife always cuts both ways. Sometimes you may benefit from having only certain forms of retail (for example, only traditional peripheral retail) establish themselves in your area, but it may just as well be that you actually see advantages in having a real "crowd puller" (for example, a supermarket) establish itself in your area, which would normally be kept away from a peripheral location.
In either case, it is advisable to be proactive. This can be done by doing your own research in advance. What research that should be obviously depends on the specific situation, but it could include:
Even if you do not agree with a restriction placed on the range you are to run, it may be advisable to examine whether such a restriction is justifiable.
The effect of such ex ante studies will be to make it harder (or easier) for your municipality to pass the proportionality test. And that, of course, will help you achieve the most optimal business climate for you.
Do you want clarity on whether your building plan fits within the zoning plan? For a fixed price, our specialists will investigate the possibilities. Click here for more information about our Zoning Quickscan.
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