704 COMPETITION LAW IN TOURISM commercial activity45. This ruling was recently confirmed by the Spanish Supreme Court46, which stated that: “(…) the prohibition to rent holiday housing in the designated touristic areas (…) is deemed contrary to the principle of free enterprise of Article 38 of the Spanish Constitution and to the freedom to provide services enshrined by Directive 2006/123/CE (…) as the only possible explanation [for the prohibition] appears to be to protect the traditional supply of accommodation services, what is deemed contrary to the principles of necessity and proportionality established in Article 5 of the Law 20/2013 on Market Unity”47. The High Court of Castile and León partially ruled in favour of the CNMC, declaring illegal the prohibition to rent individual rooms48. Conversely, the High Court of Galicia dismissed all the CNMC’s claims49. The CNMC has appealed both rulings before the Supreme Court and they are still pending. In 2018, the CNMC adopted a study on the regulation of short-term housing rentals50. The study identified potential grounds for introducing restrictions to competition, namely negative externalities in the formof nuisances to neighbours, congestion and environmental effects and rising housing prices for residents. However, it observed an excessive generalisation of those externalities, which were often assumed by regional and local regulation without a specific fact-based analysis51. Finally, the study witnessed instances where there could be less restrictive means to achieving the same goals52. A final point to make is the fact that of the excess of regional regulation in Spain has led to a disparity of provisions from one region to another. 45 Ruling of the High Court of Canarias of 21 March 2017 No. 41/2017 in Ordinary Proceedings No. 94/2015. 46 Ruling of the Supreme Court of 15 January 2019 No. 26/2019 in Cassation Appeal No. 3760/2017. 47 Free translation by the author form the original in Spanish: “(…) la prohibición de ofertar viviendas vacacionales que se encuentren ubicadas en las zonas turísticas delimitadas en el ámbito territorial de Canarias establecida en el artículo 3.2 del Decreto 113/2015, es contraria al principio de libertad de empresa que garantiza el artículo 38 de la Constitución Española y a la libre prestación de servicios que consagra la Directiva 2006/123/CE, del Parlamento Europeo y del Consejo relativa a los servicios en el mercado interior, en cuanto del análisis del procedimiento de elaboración de la norma reglamentaria se infiere que la única explicación plausible parece ser la de tratar de favorecer la oferta de productos alojativos tradicionales, lo que resulta contrario a los principios de necesidad y proporcionalidad enunciados en el artículo 5 de la Ley 20/2013, de 9 de diciembre, de garantía de la unidad de mercado”. 48 Ruling of the High Court of Castile and León of 2 February 2018 No. 64/2018 in Ordinary Proceedings No. 231/2017. 49 Ruling of the High Court of Galicia of 14 February 2018 No. 64/2018 in Ordinary Proceedings No. 231/2017. 50 CNMC (2018a). 51 See also CNMC (2015b, 2018b, 2018c, 2018d). 52 For example, the study advocated the use of taxation instruments to solve externalities instead of housing quotas.
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