The new trade law abolished regional regulations restricting competition in several key commercial sectors. For instance, the new law abrogated some rules, such as those that required enrolment in registers and professional requirements to conduct trade activities, as well as mandatory minimum distances between similar shops and quantity limits for stock.
In addition to these new provisions that are specific to commercial retail activities, the trade law also introduced rules intended to have an impact on the retail real estate market. Pre-existing rules providing for market quotas to be determined in advance or calculated on the volume of sales in sub-regional areas were removed. The trade law also removed barriers to the number of large retail schemes that can be built in each sub-region. These had previously limited the number of square metres of retail sales area for large structures.
The immediate abolition of these limits should have resulted in a rapid increase in the number of large retail structures — market conditions permitting — since their development would no longer be blocked. This was how market operators initially interpreted the trade law, i.e. that there were no longer any restrictions to building shopping centres and retail parks.
However, since the Italian Constitution provides for national authority with respect to free competition but exclusive regional authority over trade, the trade law could only abrogate national legislation which was not compliant with the principles of free competition. The new law could not change regional law and had to leave this with the regions (setting a term for this purpose which expired on 1 January, 2007). The regions have generally opposed the reforms contained in the trade law or have failed to clearly express whether quotas are still enforceable after the end of the term for enacting implementing regulation.
The new law affects a sector previously governed by the 1998 Italian trade law which, according to the Italian antitrust authority, offered a good level of protection to free competition via the deregulation of small shops and simplified procedures for issuing licences, but gave regions excessive powers with regard to locations and opening times of medium and large sales volume structures (i.e. those with sales areas exceeding 1,500-2,500 square metres). Based on these powers, many regions have introduced quotas (i.e. they have divided their territory into sub-regional catchment areas and have planned the retail offering for each catchment area by limiting the number of new retail structures to be opened within it).
These limitations have already been considered as violations of free competition by the antitrust authority, not only when they are expressly based on the ratio between retail units and demand (i.e. square metres of sales area per inhabitant) or on a maximum number of new sale structures which may be opened, but also when they introduce limits which “seem to be aimed at protecting town planning or landscape objectives, but actually aim at reducing the number of licences or at focusing them in certain areas”. This rigid regional legislation has seriously affected the Italian market, where new openings have been denied or delayed for years in certain regions.
It was to improve this situation that the trade law introduced reforms to make Italian law compliant with European Union (EU) directives on freedom of competition. But a majority of the regions opposed these reforms. To date, no region has passed laws which expressly adopt local legislation pursuant to the new provisions introduced by the trade law. The region of
Only certain regions, such as Lombardy and
Consequently, the only way to overcome regional opposition would be to challenge the rejection of a licence in a test case before a regional administrative court and to have the restrictive regional decision declared invalid for not being in compliance with the trade law. Even if the trade law’s text is not particularly clear on the definition of the ‘quotas’ that must be abolished, the suit would be based on the indisputable argument that pursuant to the trade law any regional provision which violates competition is incompatible with EU and Italian constitutional rules on competition. In fact, a first precedent (regarding mandatory minimum distances between similar shops) has already been set, confirming that an anti-competitive municipal rule is not applicable because it is not compliant with the EU free competition principles that the trade law is based on.
However, although the principles are clear, it may be difficult to prove with a single case that regional quotas are violating competition principles. This is because limits to the opening of large retail units are often grounded not only on competition criteria (for example, square metres of sale area per inhabitant), but on other criteria such as the protection of town planning, environment, historic elements and landscape. From this point of view, it will be difficult in some cases to contest a quota for being in violation of freedom of competition principles if said quota has been calculated on the basis of several criteria, some of which regard limits to competition (and are therefore forbidden pursuant to the trade law), while others are based on town planning considerations or aimed at guaranteeing adequate services to consumers (and are hence admissible, even in the eyes of the antitrust authority).
Finally, even if a regional administrative court should hold that the regional legislation at issue is anti-competitive, the judge would presumably defer the decision to the
Jacopo Recla is an associate in the real estate team at DLA Piper in