22 November 2022

Scarce licences and an overriding reason for limitation

Category: Administrative law, Licenses

In the case of scarce authorisations, a distinction is made between authorisations that are scarce due to overriding reasons relating to the public interest (Article 4 of the Services Directive) and situations in which the number of available authorisations is limited due to scarcity of the available natural resources or technical capacity (Article 12 of the Services Directive).

Reasons to limit the amount of licences in the Netherlands

Overriding reasons relating to the public interest may include protection of public order, public health or consumer protection. By way of illustration, strict regulation of coffee shop policy by maintaining a maximum system of two coffee shops per municipality may be justified in some cases on the basis that an excess of coffee shops can pose a threat to public order. In the event of a scarcity of available natural resources, one can think of a limited number of available authorisations for the operation of beach pavilions, since space is in principle limited in these coastal areas.

Offering equal opportunities in the allocation of scarce authorisations

In the case of Vlaardingen Slots Machine Arcade, the Administrative Jurisdiction Division of the Council of State (hereinafter: “the Division”) confirmed that in the case of scarce authorisations, the administrative body is responsible for creating a level playing field with sufficient scope for competition where all potential candidates are given the opportunity to express their interest in an authorisation (ECLI:NL:RVS:2016:2927). According to the opinion of the Advocate General of the Council of State, this obligation follows from the formal principle of equality, also known as the principle of equal opportunities (ECLI:NL:RVS:2016:1421).

It follows from this that when a municipality decides to draw up a policy for the allocation of scarce authorisations, it is of great importance to organise a consultation round in which the parties concerned are informed about the expected changes and their options.

Transitional arrangement on the introduction of a scarce authorisations policy

With regard to the form of the new policy to be introduced, a choice can be made for new policy per activity, or for drawing up policy rules for a general allocation procedure.

If such a new policy is introduced, a transitional arrangement is required by virtue of the case law of the Trade and Industry Appeals Tribunal in light of the principle of legal certainty (ECLI:NL:CBB:2012:1). The purpose of this transitional arrangement is to inform current licensees at an early stage about the imminent changes, so that they are not caught off guard with – for example – the sudden decision by the municipality that, at the end of the next term, the authorisation that has been issued, unlike in previous years, will not be automatically renewed. After all, automatic issuing of authorisations is not permitted under the Services Directive in the case of scarce rights.

According to the Division, an appropriate degree of public access to information must also be ensured with regard to the availability of the scarce authorisation, the allocation procedure, the application period and the criteria to be applied. In this context, a comparative test is permitted, provided that the criteria contained therein are sufficiently indicative (ECLI:NL:RVS:2019:3918).

Advice on scarce rights and authorisations in the Netherlands

Partner Mark van Weeren of Blenheim has published a great book on scarce rights and licences in the Netherlands. To reduce the risk of lawsuits, it may be prudent to seek advice on the requirements that policies for the allocation of scarce rights must meet. Further to what has been outlined above, have you got any questions about efficiently arranging scarce authorisations or any need for advice? Then please contact one of Blenheim’s lawyers specialising in administrative law and the law on scarce rights and licences.