Summary Under the proposed Cloud and AI Development Act (CADA), Member States would be obliged to ensure that the allocation and use of resources within data centre acceleration zones takes place on "fair, reasonable and non-discriminatory" terms. Article 11(2) would require that allocation not give rise to speculative reservation or foreclosure practices capable of impeding effective competition or the effective development or use of those zones. As proposed, this is intended to stop actors from locking up land, energy or grid capacity without intent to build, preserving market access for new entrants. It is a proposal and not yet in force.

Detail

The proposed CADA introduces a framework to accelerate data centre deployment across the EU. A central pillar is the designation by Member States of "data centre acceleration zones" — areas where regulatory and administrative processes for data centre construction and operation are streamlined to address the Union's compute capacity deficit. To stop these zones becoming exclusive enclaves controlled by a few large players, CADA includes anti-foreclosure and anti-speculation safeguards.

The legal obligation: Article 11(2)

The primary mechanism is Article 11(2) of the proposed Regulation, which places a direct obligation on Member States to oversee resource allocation within acceleration zones. As proposed, it reads:

"Member States shall ensure that the allocation and use of resources within acceleration zones takes place on fair, reasonable and non-discriminatory terms and does not give rise to speculative reservation or foreclosure practices capable of impeding effective competition or the effective development or use of those zones."

This serves two related purposes:

  1. Prohibition of speculative reservation: It targets entities securing rights to land, energy connections or network infrastructure with no genuine plan to deploy capacity. "Land-banking" sites or hoarding grid-connection slots can create artificial scarcity, raising costs for competitors and slowing market growth; Article 11(2) would tie resource allocation to genuine development.
  2. Prevention of foreclosure practices: Foreclosure occurs when participants use control over essential facilities (such as local grid access or fibre) to exclude rivals. By requiring "fair, reasonable and non-discriminatory" terms, the provision aims to stop any single operator monopolising the critical infrastructure needed to operate within a zone, preserving room for smaller European providers and new entrants.

Context: acceleration zones and resource scarcity

Article 11(2) must be read against Article 10, under which each Member State where data centre capacity is being deployed would designate at least one acceleration zone. Zones are chosen having regard to factors such as available and future power grid capacity, network connectivity, brownfield reuse and sustainability. Because they represent the most viable sites for new investment, these zones are inherently scarce. Without intervention, a first-mover advantage could let a few operators secure all available resources, undercutting CADA's aim of a diverse, competitive domestic cloud ecosystem.

Interaction with sustainability requirements

Article 11(2) operates alongside Article 11(1), under which Member States, when setting sustainability requirements for data centres in acceleration zones, would use the key performance indicators specified in Delegated Regulation (EU) 2024/1364 (Annex II, points (a) to (n)) — covering metrics such as Power Usage Effectiveness (PUE) and water usage effectiveness. The non-discrimination requirement helps ensure those sustainability standards are not weaponised for exclusion: any operator meeting the defined technical and environmental standards should have a fair chance to participate.

Enforcement and Member State responsibility

CADA, as proposed, places the onus on Member States. The Regulation does not set a single EU-wide penalty for foreclosure in acceleration zones; instead it requires Member States to ensure their allocation frameworks comply with the obligation. National authorities responsible for spatial planning, energy grid management and competition would need to coordinate to monitor allocation, which could in practice involve:

  • Time-bound commitments: requiring developers to demonstrate progress toward construction to retain rights to land or grid connections;
  • Transparency in allocation: publishing clear criteria for how energy and network capacity are assigned within the zone;
  • Competition oversight: allowing competition authorities to intervene where an allocation decision appears to distort the market.

What this means for you

For in-house counsel and compliance officers at cloud providers, data centre operators and developers, Article 11(2) would introduce operational and strategic considerations:

  • Due diligence on resource rights: When acquiring land or securing grid connections in a designated zone, build clear development milestones into contracts. Holding resources without an executable deployment plan could be treated as "speculative reservation" under national implementations.
  • Competition-law compliance: Review how you allocate resources. If you operate existing infrastructure in a zone, handle third-party access requests (for colocation or shared fibre) on fair, reasonable and non-discriminatory terms to reduce antitrust exposure.
  • Engagement with national authorities: Engage early with national competent authorities and the single information points under Article 12 to understand how "fair, reasonable and non-discriminatory" terms are interpreted locally.
  • Contractual safeguards: Consider lease and interconnection clauses aligned with the anti-foreclosure principle, such as release of unused resources back to the allocation pool.

Common misconceptions

  • "This only applies to public land." Article 11(2) covers the "allocation and use of resources" within acceleration zones, which can include grid-connection capacity, network capacity and related rights, regardless of public or private ownership, where they sit within a designated zone.
  • "Speculative reservation is a criminal offence." As proposed, CADA does not criminalise it. It frames it as a practice Member States must prevent; consequences are likely administrative — loss of rights, penalties under national law, or restrictions on future participation.
  • "Large incumbents are banned from acceleration zones." CADA does not ban large players; it prohibits practices that impede competition. Established operators can participate provided they do not foreclose the market or reserve resources speculatively. The aim is a level playing field, not exclusion.

Related

This is general information about a draft EU regulation, not legal advice.