The EU Single Market at 30: How corporate complaints are blocking progressive change

Through a series of case studies, the report shows how corporations have managed to obstruct social housing measures, progressive healthcare reforms, protection from harmful substances as well as bans on short-distance flights. The case studies cover countries like France, Estonia, the Netherlands, Romania, Slovakia, Sweden, Portugal and Spain.

In almost all cases, corporate interests were either able to push for further deregulation, or stop, delay or weaken progressive legislation that harms their profits.

Companies, lobbyists and industry associations use three enforcement mechanisms to get the Commission to investigate national legislation for potential breaches of EU law. The result? The delaying, weakening or blocking of the much-needed social and ecological transition in Europe.

The report shows that:

• The Commission receives on average about 400 corporate complaints about alleged violations of Single Market law each year.
• Corporate interests trigger the European Commission into initiating investigations, which can evolve into infringement procedures, which deal with potential breaches of Single Market legislation. The Commission not only welcomes, but sometimes even solicits these complaints.
• These complaint mechanisms offer a very powerful toolset for companies and industry associations hoping to prevent the introduction of unwanted national-level legislation, or to roll back existing laws.
• These industry complaints are often part of a broader lobbying strategy and add to the pressure on national governments to withdraw legislative proposals.

The cases presented in the report are only the tip of the iceberg and a severe lack of transparency makes it impossible to assess the full scale of the problem: how many complaints have resulted in Commission investigations and the weakening or withdrawal of environmental or social protection measures?

Olivier Hoedeman, Corporate Europe Observatory’s researcher says:

"We need an overhaul of Single Market governance to safeguard the national and local measures required for Europe's urgent ecological and social transition. But instead of protecting the democratic space of public authorities, the EU is going in the opposite direction.”

“Under the slogan of “completing the Single Market”, the Commission and corporate lobbyists insist on further strengthening enforcement mechanisms that could create major new obstacles for Europe’s social-ecological transformation."

Moritz Neujeffski, researcher and co-author of the report, says:

"The Commission has increasingly been shifting investigations of corporate complaints into an informal, even less transparent sphere. In this way, the public stays in the dark about how climate or social protection initiatives may get scrapped due to market concerns. To enable a democratic process and an open debate around a new approach, the Commission must start proactively informing the public about corporate complaints and ongoing Commission investigations. Improved transparency is crucial for enabling public scrutiny and creating accountability about the Commission’s use of its powers in this field."

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ENDS

For more information or interview requests please contact: Olivier Hoedeman, Corporate Europe Observatory researcher, olivier@corporateeurope.org, (+32) 0474 48 65 45

Notes to the editor:

• The three specific enforcement mechanisms related to the Single Market that companies, lobbyists and industry associations actively use to undermine progressive legislation at the national and municipal levels are: the Commission’s complaint mechanism, the notification procedure in the field of technical regulation and the services notification procedure.
• This lobbying leads to the scrapping of existing national legislation (e.g., on social housing, health insurance or gambling), the weakening of planned new progressive measures (e.g., in the case of the short-haul flight ban) or severe delays as a result of the Commission’s interventions on behalf of industry (e.g., the ban on Bisphenol A).
• The Commission’s communication on 'The Single Market at 30', launched in March, announced a whole range of new initiatives for "enforcing existing Single Market rules and removing Member State-level barriers” that amongst others, included:
  
  i. Expanding the 2020 Proportionality Test Directive, which would force governments to provide far more elaborate justification for new regulations around services. This is a new attempt to reintroduce measures that were already proposed in 2017 in the Services Notification Procedure Directive that was defeated a few years later in 2020.
  
  ii. Introducing a single notification window, which could transform the lighter model that currently exists for services notifications into the much stricter notification and approval system that exists for national-level rules for product standards.
  
  iii. Setting up Single Market offices to "address Single Market barriers", which would create new obstacles at an early stage of national and sub-national decision-making processes
• The report recommends several steps the Commission should take to increase transparency regarding the Single Market enforcement mechanisms, including setting up a public information system for the registration of complaints, informal pre-infringement investigations, and infringement procedures. Improved transparency should include the proactive publishing of key documents concerning investigations, including letters of formal notice, reasoned opinions, and pre-infringement procedures.
• The report recommends a 'just transition' exemption to Single Market enforcement, which would guarantee that initiatives promoting a socially-just climate and environment transition would not be challenged under Single Market enforcement rules. Public services and collective labour law should also be more comprehensively exempt from challenges.