Economic Tests

Economic Tests in Europe

Prohibition of economic tests in relation to the E.U. Services Directive

The following is an examination of prohibition of economic tests regarding the European Union Servicies Directive [1]:

Prohibition of economic tests: Prohibited establishment requirements

Article 14(5) requires Member States to abolish requirements that may exist in their legislation laying down a case-by-case application of economic tests. In particular, Member States will have to verify whether their legislation makes the granting of certain authorisations subject to proof of the existence of an economic need or market demand, to an assessment of the potential or current economic effects of the activity, for instance on competitors, or to an assessment of the appropriateness of the activity in relation to economic planning objectives set by the competent authority. If provisions of this kind are in force, they will have to be eliminated. Article 14(5) clarifies 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, etc. Economic

tests exist in some Member States, in particular in the commerce sector (for instance for the opening of supermarkets, shopping malls, etc.), and often require service providers to carry out costly and time-consuming economic studies whose outcome is generally uncertain82 . Such tests are highly burdensome on service providers and may open the doors to particularly arbitrary results. They delay the establishment of service providers considerably, if they do not indeed fully hinder the establishment of newcomers. In practice, under such schemes, service providers are often required to submit data such as the expected supply and demand, the economic impact of the new business on operators already present in the local market or the existing market share of the provider in a given territory, etc.

In this context, it should be noted that, on the basis of the case-law of the ECJ, reasons of an economic nature (for example protection of a certain category of economic operators, maintaining a certain market structure, etc.) cannot justify restrictions of the fundamental freedoms of the Internal Market, including the freedom of establishment83.

Resources

Notes

  1. Information on prohibition of economic tests based on the EU Services Directive Handbook, UK Government

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