2017-11-24
FOR Communication 23/2017: The ban on Sunday trading restricts the freedom of choice, damages the economy and is a bad law
Synthesis:
- Despite warnings, voiced for over a year by FOR and other organizations, the Parliament, with the votes of PiS (Law and Justice Party) and Kukiz '15, adopted Bill on Restrictions Related to Trade on Sundays, pushed through by "Solidarity," politically affiliated with PiS. The act comes into force on 1 March 2018. Until the end of 2018, the trade ban will not apply on the first and last Sunday of the month, from 2019 only on the last Sunday of the month, and in 2020 a total ban will be introduced.
- Prohibition of trade on Sunday trade will affect the freedom of choice for both consumers and employees, many of whom value the flexibility of days and hours of work in retail.
- In shops, shorter opening hours mean reduced employment. In practice, this means job reduction in the trade sector (or a slower increase in employment) and shorter work hours for remaining employees. Empirical studies show that similar bans hampered employment in the US, Canada, Germany, and the Netherlands. PwC (2016; 2015) estimates that the all-Sundays ban on trade will reduce the employment in Poland by 36-85 thousand.
- The adopted ban favors small stores at the expense of bigger and more efficient ones. This will additionally affect the freedom of choice of consumers as well as employees. Consumers, who are often more likely to choose large stores due to lower prices, wider offer or higher standard of service, will lose this opportunity. Small stores are more likely to violate employee rights and on average offer lower wages.
- Closing stores one day per week will limit their use by 1/7, and thus reduce the return on investment in the construction of stores. Ultimately, companies will be forced to - at least partially - pass on the cost increase to consumers in the form of higher prices. Empirical studies show that this is what happened in Germany, the Netherlands, and Sweden.
- The adopted bill is one of the most legally flawed acts adopted by the Sejm in recent years.
- Numerous exclusions from the ban make it inconsistent with the constitutional rule of non-discrimination.
- Due to its imprecise formulation, the bill will most likely prohibit part of online sales channels, in particular mobile applications. This is an example of a high legislative risk in Poland which discourages companies from investing.
- The width and selectivity of the list of exceptions to the ban mean that it should be reported to the European Commission as public aid prohibited by European law.
- Other doubts arise from the lack of precision of the introduced penal provision on "malicious and persistent violation of the provisions of the Act on the prohibition of trade".
- The project contravenes the EU freedom of movement of goods, because it applies a broad definition of 'trade' including the delivery of goods. This is noted in the opinion of the Ministry of Foreign Affairs on the bill as well.
Contact with the authors:
Rafał Trzeciakowski, economist
rafal.trzeciakowski@for.org.pl
Patryk Wachowiec, legal analyst
patryk.wachowiec@for.org.pl
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