COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 30.03.1998 
COM(1998) 197 final 
COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 
THE BUSINESS TEST PANEL 
A PILOT PROJECT 

THE BUSINESS TEST PANEL 
A PILOT PROJECT 
1. INTRODUCTION 
Excessive regulation carries a high economic cost and endangers the 
competitiveness of industry and business and its employment potential1. Unsuitable 
and imprecisely targeted measures may also adversely affect the functioning of the 
Single Market. All regulations must be fully justified, respect the principle of 
subsidiarity, be proportionate to their objectives and not impose excessive 
compliance costs and administrative burdens on enterprises, in particular on small 
businesses. 
In recent years, the Commission has launched several initiatives to simplify and 
improve the quality of legislation in order to implement the orientations of its 
regulatory policy guidelines adopted in 19962. The SLIM programme has 
developed a new, targeted approach to reviewing and simplifying Single Market 
legislation, in partnership with the Member States and with those operators affected 
by the legislation. The Better Law Making report provides an overview and 
highlights Community action on simplification. The newly created Business 
Environment Simplification Task Force -BEST- will make a further contribution to 
improving the environment for business by proposing measures to reduce the 
unnecessary administrative and regulatory burdens which restrain the development 
of European business, particularly SMEs. Finally, the business impact assessment 
system which is an internal Commission procedure is intended to be a 
comprehensive analysis of the impact on business, in particular small firms, of those 
legislative proposals which are relevant for business. An important part of the 
process leading to the final impact assessment is the consultation procedure, both 
with outside interests, including business organisations, and informally with the 
Member States. Further improvements to the system and procedures have been 
sought, in particular, by business organisations and the Council. The Commission is 
currently preparing revised guidelines for its internal working procedures on the 
completion of the business impact assessments. 
In the light of some developments at national level to improve the assessment of the 
costs and administrative consequences of proposed legislation, the Commission 
decided, in the Action Plan for the Single Market, to undertake pilot projects to 
improve consultation procedures with business on the costs of implementing certain 
new legislative proposals. As a pilot exercise, the European Business Test Panel 
was also proposed (pilot projects to be launched during 1998). 
The Special European Council on Employment in Luxembourg (November 1997) asked both 
the European legislator and the national legislators to press on with their efforts to simplify 
the regulatory and administrative environment for businesses and especially small and 
medium-sized enterprises 
SF,C(95) 2255/7 of 18.0Ï.1996. 
Consultation of the panel 
• does not aim at assessing the objective and merits of the proposed legislation, 
but at quantifying the compliance costs and assessing the administrative burdens 
for business of proposed new legislation within tightly defined time limits. This 
will allow the Commission to receive direct feedback from individual enterprises, 
including SMEs, and to judge whether it has achieved the necessary balance in 
terms of costs and benefits in its legislative proposals. 
• 
• will also aim at identifying alternative solutions which would achieve the same 
objective in a less burdensome way. 
will not entail circulation of draft proposals. Material will be limited to a 
synthesis of key elements which have a bearing on compliance costs. 
• will be without prejudice to the Commission's right of initiative and competence. 
On the basis of the results of these pilot projects, the Commission will consider 
whether to take this initiative forward and, in particular, the establishment of a 
European Business Test Panel at Community level. 
2. THE OBJECTIVE 
The ultimate objective of each initiative is to improve the Commission's regulatory 
impact analysis procedures and in this way adopt better quality proposals. The 
Business Test Panel should focus primarily but not exclusively on the compliance 
costs and the administrative burdens that may hinder the development of trade and 
industry. This would be useful and relevant information. The pilot phase will 
include proposals from a limited number of areas. In any event, given that Single 
Market legislation essentially aims at removing burdens and barriers for companies 
and that the Commission legislative activity has drastically reduced, the number of 
legislative proposals suitable for submission to the Business Test Panel will 
inevitably be small. 
The Test Panel would not replace the normal consultation procedures but be a 
supplement to it in the final phase of preparing legislative proposal. As with other 
consultation procedures, recourse to the panel will be without prejudice to the 
Commission's right of initiative. The results of the consultation of the panel will be 
available to the Commission when it takes its final decision. Representative 
organisations and other interested bodies will thus continue lo be consulted by the 
Directorate General concerned, and the Commission will continue with its normal 
practice of wide consultation, for example, through Green Papers, working 
documents and the holding of meetings with outside interests including business 
organisations. 
3. THE APPROACH 
The Business Test Panel will have the following characteristics: 
- It should be representative. It should therefore comprise firms of all sizes, 
including, but not exclusively, SMEs, and should have a sufficiently broad 
geographical and industrial coverage, including the retail and the services sector; 
- It should provide reliable results. Firms that take part in the Test Panel will need 
to understand the implications and be ready to undertake the necessary work. 
Participation will be on a voluntary basis. 
- It should itself impose very light administrative burdens for the Commission 
departments (and national administrations) and for the Test Panel's member 
firms. Existing structures will therefore be used as much as possible. 
- It should be operational in order to meet exactingly short timescales and thereby 
avoid delaying the legislative process. 
- Confidentiality should be assured. Consultation will meet existing Commission 
confidentiality rules. Businesses will respond to the questionnaire anonymously. 
4. SETTING UP THE PANEL 
Various options for the form of the Test Panel can be considered: 
• A European Business Test Panel, under the Commission's direct management 
and responsibility. This would imply the need to consult many thousands of 
firms to get a statistically valid result. 
• We could rely on the main representative business organisations at European 
level, working through their existing networks to contact firms in the fifteen 
Member States; 
• We could use existing national panels, or those to be set up within national 
administrations or national business organisations; 
• We could create a network of specialist institutions or consultants. 
After consultation of the members of the Internal Market Advisory Committee, the 
Commission considers that a decentralised approach should be pursued as far as the 
launching of pilot projects is concerned. For this trial period, each participating Member 
State (many of which already have a consultation structure) is invited to set up a panel 
structure which takes account, where appropriate, of its own consultation traditions and 
procedures or bodies. Each Member State will have the responsibility, within the criteria 
defined above and in particular with regard to representativeness, to decide the size and 
composition of the panel. Panels could be set up either directly by the national 
administration, or in collaboration with national business organisations. Each Member 
State must designate a correspondent in their administration (or business organisation), 
who would liaise with the Commission, be responsible for organising the consultation at 
national level and ensure that the strict conditions set by the Commission, in particular on 
the time limit for consultation, are respected, 
5. ORGANISATION 
Member States will be responsible for the practical organisation of the consultation 
process with the companies. The Commission will be responsible for the selection of 
each proposal for Test Panel consultation and the assessment and processing of the 
results of the consultation. The Commission will make the necessary material available 
(summary of proposed legislation, questionnaire) to Member States. The results of the 
consultation will be made public. 
5.1. The choice of legislative proposals 
The Business Test Panel will be invited to consider certain proposals only 
from those that are likely to have a significant impact, including in terms of 
compliance costs and administrative burdens, on business. The Commission 
will choose on the basis of its annual work programme the indicative list of 
envisaged legislative actions that will be subject to consultation of the Test 
Panel and a business impact assessment. 
The Business Test Panel will initially be consulted on those draft proposals 
for legislation which affect a wide range of sectors and a significant number 
of businesses in the panel, rather than on legislation that concerns a very small 
number of sectors. 
5.2. The consultation 
For the measures selected the Test Panel will be consulted within defined 
deadlines before a formal proposal is adopted by the Commission. This could 
mean that consultation of the individual enterprises which are members of the 
Panel on aspects such as compliance costs and administrative burdens could 
be launched in parallel with possible consultation of European business 
organisations concerned which aims at a much broader, sometimes political 
objective. This consultation must not hold up the legislative process. 
Consultation will be based on short explanatory memorandum of the draft 
proposal indicating the main legislative provisions that may necessitate 
internal adjustments for the enterprises concerned (in each Community 
language). A standard questionnaire which will also be developed in each 
Community language, will focus on quantifying compliance costs. It will 
draw a distinction between recurring and non-recurring compliance costs and 
administrative burden. The questionnaire may also offer respondents the 
opportunity to propose alternative solutions which would achieve the same 
ends in a less burdensome way. Total time spent by any individual enterprise 
to complete each exercise should be kept to the minimum necessary. 
Each national correspondent will be responsible for receiving and distributing 
to the Panel members all the necessary material. The Test Panels will 
normally have three weeks to respond, although in some cases, a shorter 
deadline may be set. Individual businesses' responses to the questionnaire 
will be forwarded directly to the Commission. 
Electronic transmission systems, such as the Internet, will be used to speed up 
the process. 
5.3. The analysis of the results 
The Commission will analyse and evaluate both the compliance costs and the 
administrative burdens of the proposed legislation, identifying any provision 
of the draft legislation, which have been indicated as problematic. Compliance 
costs linked with the proposed legislation will also be quantified. 
Any Member State may itself analyse the results of the consultation 
undertaken at national level. 
5.4. The follow up 
The Directorate General initiating the proposal will assess whether 
amendment is required to the draft proposal for legislation to take account of 
the possible concerns expressed by the enterprises consulted. The results of 
evaluation report will be included with the business impact assessment as part 
of the COM document sent to the Council and European Parliament. The 
Directorate General concerned will indicate to what extent the results of the 
consultation have been taken into account. Business organisations at European 
and national levels will also be informed of the results of the consultation, 
which should also be made available on the Internet. 
6. TRIAL PERIOD- PILOT PROJECTS 
In the initial phase, pilot projects will be launched on a voluntary basis, in each 
Member State that so wishes. A broad geographical coverage will be sought. 
Discussion at the informal meeting of the Ministers responsible for the Internal 
Market on 13 February identified Member States that are willing to participate in 
this trial period. 
A thorough evaluation of the process as well as the pilot projects themselves would 
be made in 1999. This evaluation will involve the Member States which have 
participated in the pilot phase and the businesses that took part in the panel and 
representatives from business organisations. 
Following this thorough evaluation, the Commission will consider whether it is 
worth taking this initiative forward, and, in particular, the establishment of a 
European Business Test Panel at Community level. 
Financial Statement 
1. TITLE OF THE ACTION 
The Business Test Panel - A pilot project. 
2. BUDGET HEADING CONCERNED 
B5-3000. 
3. LEGAL BASIS 
Treaty establishing the European Union and in particular articles 8a, 30 to 36, 52 to 66, 
99, 100,100a, 100b, 113, 169 and 171 thereof. 
4. DESCRIPTION OF THE ACTION: 
4.1 General objective 
The Action Plan for the Single Market envisages the creation of a panel of European 
companies, consultation of which will supplement consultations usually carried out by the 
Commission in the preparation of its legislative proposals. The work of the panel will 
concentrate on the compliance costs and likely administrative implications of proposed 
new legislation. The Commission will begin pilot consultation of the panel during 1998. 
The consultation will enable the Commission to evaluate the compliance costs and the 
administrative implications likely to result from proposed new legislation by means of 
direct dialogue with companies, including SME's. 
4.2 Period covered and arrangements for renewal or extension 
The pilot projects will initially run for a period of ONE YEAR. 
During this initial phase, pilot projects will be launched in those Member States who 
want to be involved. Participation will therefore be voluntary. The informal meeting 
of 13 February 1998 of the Ministers responsible for the Internal Market showed that 
a number of Member States were already willing to take part in these pilot projects. 
Pilot projects will be subject to an in-depth evaluation in 1999. This evaluation will 
involve the Member States involved in the pilot phase, the companies vvhirli arc momlui 
of the panel and the representatives of business organisations. 
5. CLASSIFICATION OF EXPENDITURE 
NCE; CD. 
1-
6. TYPE OF EXPENDITURE 
Operational expenditure essentially comprises financing for analysis of results as well as 
evaluation of projects, enabling the Commission to control costs and the administrative 
consequences of the application of new legislation for companies. 
7. FINANCIAL IMPACT 
7.1. Method of calculation of the cost of the action 
The creation and consultation of the panel will be assured and financed by the 
Member States. The action will not require additional financial and other resources. 
7.2 Itemised breakdown of costs 
IX' in I-XT I (current prices) 
Breakdown 12 months 
Analysis of the results and evaluation of the projects 100,000 
100,000 
Total I 
8. FRAUD PREVENTION MEASURES 
The Commission departments will check the studies and evaluations requested before 
payment, taking into account contractual obligations, economic principles and the 
principles of sound financial and general management. Anti-fraud provisions 
(supervision, submission of reports, etc.) are included in all agreements or contracts 
between the Commission and recipients of payments. 
9. ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 
9.1. Specified and quantified objectives; target population 
The pilot projects to be launched by the Commission in 1998 will concentrate on the 
question of the compliance costs and the likely administrative implications of new 
Commission legislative proposals. 
They will be carried out in a limited number of Member Slates and will involve panels 
of several hundred companies, sufficiently representative in terms of company size, 
sector and geographical coverage. 
The consultation will enable the Commission to obtain a better evaluation of the likely 
cost and administrative consequences of proposed new legislation by direct dialogue 
with individual companies, including SME's and, if necessary, to adjust such legislation 
to encourage competitiveness and the creation of new jobs. 
2 
The evaluation will be carried out on a case-by-case basis by analysis of results received 
from the hundreds of companies in the panel from the various participating countries. 
The pilot projects are directed, via the Member States, at companies of any size likely to 
be affected by the proposed legislation subject to consultation, and which need to base 
their activities on clear and simple legislation geared to their needs in order to exercise 
their rights within the Single Market without running into unnecessary restrictions or 
bearing excessive expenses. 
9.2. Grounds for the operation 
The ultimate objective of the creation of the panel of European companies is to 
allow companies to benefit fully from the advantages of the Single Market by 
improving relevant legislation. It will concentrate on the compliance costs and 
administrative implications likely to result from the new proposed legislation. The 
economic advantages which will result from this evaluation should achieve fully 
justify the proposed intervention. 
It is advisable to consider this action in the light of the Commission's other 
activities regarding the simplification and consolidation of legislation (SLIM, 
Business Impact Assessment) 
The creation of the "panel of companies" was prompted by the need to confront 
the different perspectives of legislators and those who are directly affected by the 
legislation, namely companies, and was particularly aimed at the costs likely to 
result from the application of certain proposed new legislation. 
The Commission examined several options for the establishment of the panel of 
companies: 
- Statistically sound representativeness. This representativeness, however, 
would require the involvement of thousands of companies. 
- The Commission could have made use of the networks of organisations of the 
most representative companies at European level to contact companies in the 
15 Member States. This approach would have been relatively complicated and 
very costly. 
- The Commission could have used existing national panels or those to be 
established in national administrations or company organisations. 
- The Commission could have created networks of specialised agencies or 
consultants. 
After consultation with the members of the Consultative Committee of the 
Internal Market, the Commission decided that decentralisation was the best 
approach because it involved lower administrative costs, greater reliability and 
greater effectiveness in managing the panel. 
This decentralised approach, however, should be accompanied by 
centralisation at Commission level of the processing and analysis of the results 
of consultation, which would involve low financial expenditure. 
3 
9.3 Monitoring and evaluation of the operation 
There will be an in-depth evaluation during 1999 involving the Member States 
taking part in the pilot projects, as well as the companies on the panel and 
representatives of company organisations. 
A decision, to be forwarded to the Council if necessary, to extend the pilot 
projects of the panel of European companies will be taken in light of this 
evaluation. 
10. ADMINISTRATIVE EXPENDITURE (PART A OF SECTION III OF THE 
GENERAL BUDGET) 
The administrative resources necessary will be provided by the annual Commission 
decision on resource allocation taking account of the staff and supplementary amounts 
accorded by the budgetary authority. 
10.1 Effect on the number of posts 
Types of post 
Officials 
or temporary 
staff 
Other resources 
Total A 
B 
C Staff to be assigned to 
managing the operation 
permanent 
posts 
1 
1 
1 
3 temporary 
posts Source 
Existing 
resources in 
the DG or 
department 
concerned 
1 
1 
1 
3 Additional 
resources Duration 
1 YEAR from 
the launch of 
the pilot project 
10.2 Overall financial impact of additional human resources 
(ECU's) 
Amounts Method of calculation 
Officials 324,000 108,000 x 3 = 324,000 
Temporary staff 
Other resources (indicate 
budget heading) 
Total 1 324,000 1 
By use of existing resources to be assigned to administration of the action (calculation 
based on titles A1, A2, A-4, A-5, A-7) 
^/>o 
10.3 Increase in other administrative expenditure as a result of the operation 
(ECU'S) 
Budget heading Amounts Method of calculation 
(no. and title) 
A-701 Missions 8,000 Missions (800 x 10) (8 Member States have 
already registered to take part in this initial 
phase. Greater participation may be 
expected: 2 more missions are expected) 
Total 8,000 (6,317/8= 807 ECU/average; 807 x 2: 1,614 
1 I ECU) 8,070.24 
Expenditure will be financed within the total budget allocated to DG XV. 
xn 

ISSN 0254-1475 
' COM(98) 197 final 
DOCUMENTS 
EN 08 10 09 01 
Catalogue number : CB-CO-98-209-EN-C 
ISBN 92-78-32864-2 
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