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 this 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, it is designed to stop incumbents or other actors from hoarding capacity, land, grid connections or permits without intent to build, safeguarding the EU's goal of rapidly expanding sustainable compute infrastructure. CADA is a proposal and not yet in force.

Detail

The proposed CADA introduces a framework to address the EU's shortage of computing capacity. A central pillar is the designation of data centre acceleration zones (Article 10) — territories where deployment is facilitated through streamlined permitting, coordinated energy planning and simplified administrative processes. Rapid deployment carries market risk, however, particularly speculative behaviour that could stall the very progress the regulation seeks to accelerate. To mitigate this, CADA would introduce safeguards against the hoarding of resources.

The legal prohibition: Article 11(2) and Recital 39

The core mechanism is Article 11(2) of the proposal, which would require Member States to 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 is a binding obligation on Member States. It would require national authorities to design and enforce allocation mechanisms — for land leases, grid-connection queues or planning permissions — that prevent actors from securing resources without a genuine, timely commitment to develop them.

Recital 39 explains the legislative intent. As proposed, it states that to "prevent speculative reservation of resources in acceleration zones, ensuring fair, reasonable and non-discriminatory access that preserves effective competition and supports the timely and efficient development of acceleration zones," Member States should ensure that allocation and use of resources takes place on fair, reasonable and non-discriminatory terms and does not give rise to any speculative reservation or foreclosure practices impeding effective competition or the effective development or use of those zones.

What "speculative reservation" and "foreclosure practices" could cover

CADA does not give a granular, technical definition of "speculative reservation" in its enacting terms. Read together with Recital 39 and the Act's objectives, the prohibition would likely capture behaviours such as:

  1. Land and site hoarding: securing large plots within a zone without a concrete construction timeline or sufficient financial commitment, blocking other qualified operators from scarce land.
  2. Grid-connection queue manipulation: reserving capacity in the grid-connection queue without project readiness. Because available and future power grid capacity is an express consideration when designating zones under Article 10(1)(b), hoarding grid connections can effectively foreclose the market for operators who cannot build without power.
  3. Permit hoarding: obtaining authorisations covered by the aggregated baseline permit framework (Article 13) and holding them without commencing construction, artificially restricting supply.

The role of Member States

The obligation under Article 11(2) would rest primarily on Member States, which would be responsible for designing allocation mechanisms for land, grid connections and permits in their zones; monitoring compliance; and taking corrective action against speculative reservation or foreclosure. This aligns with the broader duty under Article 10 to consider "available and future power grid capacity" and "available and future network connectivity capacity" when designating zones, so scarce resources go to projects that genuinely help close the capacity gap.

Interaction with other provisions

The prohibition would work alongside other CADA provisions:

  • Article 10(1): requires Member States to consider the minimum and maximum size of facilities when designating zones, which can curb fragmentation or hoarding of sites.
  • Article 13: introduces facilitated administrative processes and an aggregated baseline permit. Without safeguards, fast-track permitting could be abused; Article 11(2) helps ensure its benefits are not captured by inactive holders.
  • Article 14: allows designation of "data centre strategic projects." Speculative actors are unlikely to meet those criteria (for example contributing to grid stability, integrating EU-designed hardware, or addressing a major compute shortage under Article 15), further isolating them from support.

What this means for you

For in-house counsel and compliance officers at data centre operators, cloud providers or infrastructure developers, Article 11(2) would add a layer of regulatory risk and compliance requirement.

1. Diligence in resource acquisition

When securing land, grid connections or permits in a designated zone, be prepared to demonstrate genuine intent and ability to develop — for example through detailed construction timelines, evidence of financial capacity, and proof of project readiness such as completed environmental assessments or secured equipment supply.

2. Monitoring national implementation

Because Member States would enforce Article 11(2), mechanisms will vary by country. Watch for use-it-or-lose-it clauses (deadlines to break ground after securing a permit), penalties or revocation for stalled projects, and transparent allocation registries for grid-connection requests and land allocations.

3. Competitive compliance

If you operate across multiple EU jurisdictions, keep allocation strategies consistent with the non-discrimination requirement. Practices that give an unfair edge over competitors — such as exclusive long-term leases without development obligations — could attract regulatory scrutiny or challenges.

4. Risk of losing rights

CADA does not specify direct EU-level penalties for speculative reservation, but national authorities may revoke permits or grid connections where they find foreclosure practices, with potential financial and reputational cost.

Common misconceptions

"Speculative reservation" only applies to land. Article 11(2) refers to "resources," which can extend to grid connections, network capacity and planning permissions. Hoarding grid connections may be just as prohibited as hoarding land.

This is a voluntary best practice. Article 11(2) uses mandatory language ("Member States shall ensure"). As proposed, it is a binding obligation on national authorities, not a recommendation.

Only large hyperscalers are at risk. Any operator, including mid-sized ones, could be accused of speculative reservation if it secures resources without a clear development plan. The prohibition applies to all market participants.

This provision applies to all data centres in the EU. Article 11(2) applies specifically to acceleration zones (Article 10). Data centres outside designated zones are not subject to this particular allocation rule, though other national planning laws may apply.

Related

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