EU launches probe into agricultural land restrictions

By bne IntelliNews March 26, 2015

bne IntelliNews -

 

The European Commission (EC) has opened infringement procedures against Bulgaria, Hungary, Lithuania and Slovakia over restrictions on agricultural land acquisitions, the EU executive announced on March 26.

The commission said the laws regulating agricultural land purchase in these countries contain several provisions which restrict the free movement of capital and freedom of establishment. The provisions also contain certain restrictions that may lead to discriminatory treatment of investors from other member states, the EC said added.

The provisions in question include: a residence requirement in the given country; restrictions on persons without a local residence or previous local business activities; various restrictions on persons lacking professional knowledge, on ceding the use of land or on legal persons, as well as legal uncertainty related to the prior approval of sales contracts, the commission explained.

As a consequence, the EC requested the four states to submit observations on their legislation regarding the acquisition of agricultural land within two months. 

Foreign acquisitions of farm land is commonly a contentious issue in CEE, where large rural populations are wary of land speculation and the sale of natural resources. The advantages held by relatively rich and advanced foreign agricultural companies over local firms is another issue. 

However, critics argue that the restrictions are often part of corrupt practice by politicians with connections to local companies looking to protect them from competition.

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