New Commerce Law opens door for “big business” in the Balearics

PALMA
FOLLOWING changes to Spain's Commerce laws, leading businesses and multinationals are toying with the idea of opening branches in the Balearics, regional government said yesterday.

A spokesman explained that modifications to legislation now mean that in the case of Majorca, there is no need to ask for a regional permit if companies want to open up shops of less than 700 square metres in size. If greater than 700 square metres, the premises is then categorised as a hypermarket.

Traders such as Carrefour, Alcampo, Decathlon and Leroy Merlin, the El Corte Inglés department stores, Media Markt and retailers owned by Galician enterprise Inditex such as “Zara” clothing shops, either already have specific projects, or are studying alternatives for entering or expanding their presence in the Balearic Islands. The business incentive is based on potential growth calculated through population and income levels.

The economic crisis and financing difficulties have succeeded in slowing down some of these projects, although there are operations which have actually gone forward and are now at the point of opening. A case in point is “Opencor”, the brainchild of the Corte Ingles department store group located in Calle Menorca in Palma selling purely household goods. There are others including the construction of a “Supercor” supermarket at the roundabout of Son Moix on the road to La Vileta.

The Balearic government were recently forced by a European Union ruling to alter their Commerce laws after the introduction of the so-called Bolkestein directive which aims to free up the operations of all goods and services providers in the EU member states. In the case of Balearic legislation which was modified in December last year, the government defined hypermarkets and department stores as all those establishments whose trading premises were in excess of 700 square metres on Majorca, greater than 400 square metres on Minorca and Ibiza and over 200 square metres in Formentera.

The previously existing law, introduced by Pere Sampol, an ex Minister of the Socialist coalition in power from 1999 to 2003, defined large commercial enterprises according to economic criteria, a practice which is now strictly prohibited by European Union ruling. During Sampol's time, the regional - or second - operating license was maintained and it was the Islands' Commerce Ministry who had the power to grant or deny it.

FLOOR SIZE COUNTS
But now that the Bolkestein directive is in force, pidgeonholing businesses according to the floor size of their operation as opposed to their ledgers, large organisations are now at liberty to set up shop on urban land without asking the regional government for a permit.

If there is any restriction at all, it is that the new generation of European hypermarkets must usher in their expansion programmes on land which has already been officially classed by local government as land on which building is permitted. Such operations, could never be permitted on rural land. The regional government was forced to fight its corner over tying down the business projects to urban territory by citing environmental concerns and territory planning as overriding criteria. Fortunately for the Balearics, these arguments were the only ones permitted by the European Union.

The new Commerce Law simultaneously lifts a ban on new hypermarkets which was introduced during the term of the previous Balearic government by Partido Popular Commerce Minister, Josep Juan Cardona.

The new law will also allow new timetables for retail opening in the Balearics. Shops with surface areas of less than 300 square metres will be able to open and shut when they want.