Spain may not block big retailers from setting up shop because of concerns that they may disadvantage smaller players

Spain may not block big retailers from setting up shop because of concerns that they may disadvantage smaller players, as this breaches European Union rules, Europe's highest court said on Thursday.

The Luxembourg-based European Court of Justice was ruling on a case brought by the European Commission against Spain for letting its northeastern autonomous region of Catalonia restrict retail licences based on economic considerations.

Some of the conditions are enshrined in Spanish national laws while others are laid down in Catalan regional legislation. The restrictions include limits on new permits that stipulate they may be issued only when the authorities consider the new business will not impact small traders. "A member state may not make the opening of a large retail establishment conditional upon economic considerations such as its impact on the existing retail trade, or the market share of the undertaking concerned," the Court ruled.

"Such considerations cannot justify a restriction on the freedom of establishment."

Indebted Catalonia accounts for about of a fifth of Spain's economy and is home to the country's largest industrial centre, producing goods ranging from cars to textiles.

Spain's retail sales fell by 4.7 percent year-on-year in January, the seventh decline in a row, the country's statistics agency said earlier this month.

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