The RRI is a composite indicator combining several elements covering key areas of regulatory requirements on retail establishment (the establishment pillar) and operations (the operations pillar).
It reflects the level of retail restrictions in the 27 EU member countries without aiming to assess whether the identified restrictions are justified and proportionate. It draws inspiration from the OECD product market regulation (PMR) indicator.
In 2018, the Commission published a first edition of the Retail Restrictiveness Indicator (RRI) as an annex to the communication ‘A European retail sector fit for the 21st century’.
2022 update of the Retail Restrictiveness Indicator
As in 2018, the EU carried out the 2022 update in close cooperation with competent authorities of EU countries. It takes on board regulatory changes introduced before 1 January 2022, as well as regulatory developments adopted after this date if they were already announced.
Discussions with competent authorities have also clarified the information provided in 2018, resulting in some EU countries’ scores changing even without actual regulatory modifications.
The 2022 update strictly follows the methodology of 2018 to enable comparisons of EU countries’ retail regulatory frameworks over time. The update reveals that since 2018, some EU countries have introduced reforms and removed or reduced restrictions. In many cases, the level of restrictions remains unchanged or has even increased.
It is important to note that the indicator only captures specific regulatory elements and does not consider the broader context and the changing environment of the retail ecosystem.
Retail Restrictiveness Indicator – methodology and purpose
The RRI provides a snapshot of restrictions in EU countries and aims to capture the complexity and diversity of the regulatory frameworks across the EU. It enables comparisons between EU countries, allowing them to learn from tried-and-tested regulatory solutions in other countries and develop less restrictive regulatory frameworks without compromising their pursued public policy objectives.
The RRI should help EU countries identify elements where they can make improvements. This should create a positive dynamic leading to a more competitive retail ecosystem, enhancing its resilience and supporting its green and digital transition. Additionally, it should have a positive spill-over effect on the entire economy and benefit consumers.
The RRI also includes restrictions that may affect retailers’ ability to enter new markets and expand their operations across borders. The single market dimension remains a key driver of the ecosystem’s competitiveness and resilience.
In its communication ‘The Single Market at 30’, the Commission identified retail as one of the 4 EU industrial ecosystems with the greatest economic integration potential in the single market.
The retail sector is highly regulated in most EU countries at national, regional, and local levels. Restrictions are usually imposed to protect public policy objectives such as town-and-country planning, including maintaining the vitality of city centres, as well as protection of the environment, consumers and workers.
The RRI does not assess whether a restriction is compatible with EU law and in particular, Directive 2006/123 on services in the internal market. It does not provide a legal assessment of the justification and proportionality of restrictions. Its sole purpose is to identify restrictions. However, it should motivate EU countries to evaluate the measures in place and consider removing or reducing restrictions to ensure their regulatory frameworks allow a better functioning of EU retail markets and support the green and digital transition of the retail ecosystem.
The part of the RRI covering issues linked to retail establishment (opening of new outlets) carries a higher weighting (60%) compared to the part reflecting restrictions to operations (retail activities, 40%). This is because retail establishment restrictions are likely to act as market entry barriers and have a stronger impact on retailers’ ability to scale up.
More information
For methodological details and economic analysis of the impact of retail restrictions on market structure and dynamics, you can refer to the staff working document accompanying the 2018 retail communication.
Updates to the RRI should occur every 3-4 years. A revision to its methodology may happen in the future to encompass new developments in the retail system.