A New Single Market Strategy

The Commission has set out a new strategy to modernise the EU’s internal market for goods and services, in a Communication published yesterday, intended to boost entrepreneurship and cross-border trade, by removing existing barriers and modernising the legislative framework, as well as, improving the visibility, clarity and enforcement of existing rules.

The new strategy must be understood in the wider context of the Commission’s strategic priority to boost jobs, growth and investment in the EU. It follows and builds upon previous initiatives, such as the Commission’s Investment Plan, the Digital Single Market Strategy, and the Capital Markets Union Action Plan.

The Communication sets out actions in three key areas; firstly, ways in which the Single Market could be improved in order to create new opportunities for consumers, professionals and businesses. Secondly, how the market could be modernized in order to improve its performance. Finally, ways to ensure the practical application of Single Market rules.

Creating Opportunities for Consumers and Businesses

The Collaborative Economy

The Commission recognises the potential of the so-called ‘collaborative economy’, in which on-demand services and temporary use of assets are exchanged via online platforms. However, the current regulatory situation is uncertain not only for the providers in the new ‘collaborative markets’, but also for providers operating in existing markets.

The Commission therefore announces it will come forward with guidelines on how to apply EU law to ‘collaborative economy’ business models, with the aim of allowing ‘collaborative economy’ entrepreneurship to develop. The guidance will be based on the Services Directive, E-Commerce Directive, European consumer legislation, and treaty provisions.

The Commission will also aim to develop a monitoring framework to track the development of the ‘collaborative economy’ at different levels and ensure that no unjustified national measures hinder its development.

Helping SMEs and start-ups to grow

The Commission recognizes that there are too many barriers for SMEs and start-ups to grow, especially beyond their own regional market. The Commission therefore proposes a wide range of measures for SMEs and start-ups: 
(1) A simplification package for SMEs’ VAT regulations, with a specific focus on cross-border trade, as part of the Commission’s Action Plan for a fraud-proof VAT system. 
(2) Building on its Single Member Company proposal, additional ways, including digital solutions, to create simpler rules, for registration and the filing of company documents and a possible update of existing rules on cross-border mergers.
(3) A ‘Start-up’ initiative to make it easier for start-ups to identify and meet regulatory requirements, a public consultation would be organised on this and would also looks into how the Single Digital Gateway could help start-ups, with special features designed for cross-border operations and upscaling;
(4) A European venture capital fund of Funds through the Investment Plan and the Capital Markets Union to help start-ups secure funding for their creation and upscaling.
(5) Information campaigns to encourage young SMEs to expand cross-border.
(6) A legislative initiative on business insolvency to introduce early restructuring and a second chance, as announced in the Capital Markets Union Action Plan.
(7) Using the REFIT platform to focus on identifying and removing barriers to innovation
(8) Ways to attract innovators from outside of Europe, possibly by extending the Blue Card approach to entrepreneurs.

A Services Market without borders

The Commission also aims to remove several barriers in the single market for services and thereby make it easier to operate across borders.

In particular, the Commission wants to open up professions that are unnecessarily regulated and therefore promises to come forward with guidance for individual Member States on the reforms required. The guidance will identify the reform needed in the Member States concerned and the nature of the reforms to be implemented based on the findings of the Professional Qualifications Directive’s mutual evaluation exercise.

The Commission will also propose an analytical framework, which Member States can use when reviewing existing or proposing new professional regulations, in order to prove that public interest objectives cannot be achieved otherwise.

In order to modernize the legal framework, the Commission will propose legislation to address regulatory barriers, such as diverging legal forms, shareholding requirements and multidisciplinary restrictions in key business and construction services. The Commission also aims to review market developments and take action in connection with insurance requirements if necessary.

The Commission will also propose several measures to reduce the difficulties that service providers experience when operating across borders, in particular for construction and business services providers. The key initiative would be to introduce a ‘services passport’, a harmonised notification form along with a common electronic repository. The harmonised notification form would aim to ensure businesses looking to operate cross-borders, could provide all the information required to operate in a host country in just one place. The services passport should, according to the Commission, help businesses demonstrate that they satisfy the requirements applicable to them in the Member State where they want to provide their service. Businesses can further request the creation of a ‘common electronic repository’ of documents by their home country, which, with the use of the services passport, would aim to eliminate the need for multiple requests for information and documentation already provided to the home Member State.

Addressing restrictions in the retail sector

The Commission states that I will also come forward with a Communication on best practice for the retail sector to facilitate establishment and reduce operational restrictions. This would also provide guidance for Member States reforms and inform the Commission’s priority-setting for enforcement actions.

Preventing discrimination of consumers and entrepreneurs

In line with its Strategy for a Digital Single Market announcement to end unjustified geo-blocking, the Commission propose a legislative initiative to prevent discrimination based on residence or nationality in terms of access, prices, or other sales conditions. It aims to do so by identifying and banning specific forms of residence-based discrimination; making discrimination easier recognisable through the use of transparency tools; and reform the Consumer Protection Cooperation Regulation in order to improve the enforcement by national authorities. 

Encouraging Modernisation and Innovation

Modernising the standards system  

The Commission wants to modernize the European Standardisation System. The Commission will propose a ‘Joint Initiative on Standardisation’ between itself, the industry concerned, European standardisation organisations and the standardisation community in general with the aim of speeding up and better prioritising standard setting. The Commission would also issue dedicated guidance on service standardisation, in order to enhance the European services market.

Modernising public procurement

The Commission also wants to modernise is public procurement, which it often carried out without the required knowledge, skills, and data. Projects over EUR 700 million, pose a particular problem as the complexity and duration of the procurement process usually leads to delays. In order to improve the transparency and quality of the Member States’ procurement systems the Commission will aim to set up contact registers, improving data collection and analysis, and networking of review bodies. These actions would be carried out through existing policies, such as eProcurement, the Remedies Directives, the Single Market Scoreboard, and REFIT.
In addition, a voluntary ex-ante assessment mechanism of procurement aspects of large-scale infrastructure projects (€700ml and larger) would be developed as a specific procedure by the Commission and would be offered to the Member States.

Modernising Europe’s intellectual property framework

The Commission aims to present initiatives that should modernise the intellectual property rights framework. The Commission states that it will continue the upcoming unitary patent system and specialised patent court (The Unified Patent Court). However, there are uncertainties on how it will work together with national patents and current EU rules on national supplementary protection certificates (SPC). In this strategy, the Commission announces that they will clarify that uncertainty.

The Commission also proposes to come forward with initiatives to support the use of intellectual property by SMEs, as a follow-up to the Action Plan on the Enforcement of Intellectual Property Rights (IPR).

Additionally, it will review the IPR enforcement framework using a ‘follow the money’-approach to commercial-scale infringements, as already announced in the Digital Single Market Strategy.

Ensuring Practical Delivery

A culture of compliance and enforcement

The Commission proposes additional measures to address non-compliance with EU rules. Relying on the Better Regulation guidelines and promoting partnership with Member States, the Commission wants to start carrying out systematic compliance checks, and therefore develop a data analytics tool to better detect non-compliance.

Additionally, the Commission also wants to develop a market information tool, to collect information from specifically selected market players, in order to reinforce the basis for infringement actions and determine where regulatory solutions are required. Finally, the Commission announces that it wants existing Single Market problem-solving tools such as SOLVIT to be strengthened and streamlined.

Reforming the Service Directive’s notification procedure

As there are many short comings with the current notification procedure, the Commission wants to come forward with legislation modelled on successful features of the Services Directive’s notification procedure. Specifically, the Commission will aim to improve the notification procedure to include a requirement to notify draft legislation to stakeholder. This procedure could also be expanded to other services not yet covered by the Services Directive.

Strengthening the Single Market for goods

In order to improve the application of the mutual recognition of goods principle, the Commission announces to present an EU-wide Action Plan to raise the awareness of the principle. The Commission also wants to revise the Mutual Recognition Regulation to address administrative fragmentation and streamline the documentation required to prove a product is being marketed lawfully in a Member State.

The Commission also states that it will consider a possible legislative initiative to strengthen product compliance, in order to combat illegal and non-compliant products, by providing the right incentives to economic operators, intensifying compliance checks and promoting closer cross-border cooperation among enforcement authorities.

In order to raise awareness and understanding of the applicable legislation, a ‘first port of call’ would also be set up, based on the existing Product Contact Points; and an ‘e-compliance’ system to be offered to allow economic operators to demonstrate product compliance to competent authorities.

Next Steps

The Communication has been sent to the European Parliament and the Council, for examination. These institutions will now decide whether or not to officially respond to it.

The Commission aims to launch the actions mentioned in the Single Market Strategy in 2016 and 2017. The Commission also announced that by the end of 2017, it will review the progress on its implementation and consider whether additional actions will be necessary.