EUROPEAN COMMISSION Brussels, 7.6.2018 COM(2018) 441 final 2018/0231(COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing the Programme for single market, competitiveness of enterprises, including small and medium-sized enterprises, and European statistics and repealing Regulations (EU) No 99/2013, (EU) No 1287/2013, (EU) No 254/2014, (EU) No 258/2014, (EU) No 652/2014 and (EU) 2017/826 (Text with EEA relevance) {SEC(2018) 294 final}

{SWD(2018) 320 final}



EXPLANATORY MEMORANDUM 1.CONTEXT OF THE PROPOSAL • Reasons and objectives On 2 May 2018, the European Commission proposed the Union’s multiannual financial framework (MFF) for 2021-2027. Among other things, the Commission proposed a new Single Market Programme. This Programme will help achieve the objectives set out in the political Communication accompanying the MFF proposal. It will do so by strengthening the governance of the internal market, supporting the competitiveness of industry and in particular of micro, small and medium-sized enterprises (SMEs), by promoting human, animal and plant health and animal welfare and by establishing the framework for financing European statistics. The proposal provides for a budget allocation of EUR 4 089 million. In addition, EUR 2 000 million allocated under the InvestEU Fund, in particular through its Small and Medium-sized Enterprises Window, will significantly contribute to the objectives of this Regulation. The internal market is a cornerstone of the Union. Since its inception, it is a major contributor to growth, competitiveness and employment. The internal market has helped create jobs and brought consumers greater choice at lower prices. It continues to be an engine for building a stronger, more balanced and fairer economy. It is one of the Union’s major achievements and its strongest asset in an increasingly global world. Nevertheless, the internal market has to continuously adapt to a rapidly changing environment characterised by digital revolution and globalisation. This poses a significant challenge for regulation and enforcement. The substantial body of Union legislation underpins the functioning of the internal market. This concerns, in particular, competitiveness, standardisation, consumer protection, market surveillance and food chain regulation. It also affects rules concerning business, trade, financial services and institutions and the promotion of fair competition, which helps create the level playing field essential for the functioning of the internal market. Still, barriers to a proper functioning of the internal market remain and new obstacles are emerging. Establishing rules is only a first step; making them work is equally important. This makes it necessary to provide individuals and businesses with sufficient information about their rights, public authorities with knowledge of how to apply the rules, and courts with the required expertise to enforce them. This means information tools, training programmes and emergency mechanisms need to be put in place. It also requires cooperation to be stepped up among the competent authorities of Member States, and between them and the Commission and its decentralised Union agencies. In addition, effective enforcement and modernisation of the Union legal framework and its rapid adaptation to the ever-changing environment requires up-to-date analyses, studies or evaluations based on high-quality, comparable and reliable data. The proposed Programme brings together activities financed under five predecessor programmes in the areas of competitiveness of enterprises, consumer protection, customers and end-users in financial services, policy making in financial services and as regards the food chain, or financed previously under several Commission budget lines, all dealing with the internal market and the competitiveness of SMEs. The proposed Programme also includes new initiatives which aim to improve the functioning of the internal market. All of these activities are united by their shared objectives to regulate, implement, facilitate, enforce and protect various activities and actors within the internal market; and to preserve an internal market that continues to function without interruption. All of those activities are thus, in their different ways, essential for a well-functioning internal market and the continuation of their financial support is necessary. The proposed Programme provides for continuity of the various previous actions while streamlining and exploiting synergies between them and the new activities. Further streamlining is achieved by pooling all centrally managed financial instruments at the Union level in the InvestEU Fund, including debt and equity financial instruments for the benefit of SMEs. The loan guarantees for SMEs previously provided under the COSME programme will therefore be implemented under the ‘SME window’ of InvestEU. With regard to the recipients of debt and equity financial instruments provided under the COSME programme, the continuity of financial assistance and smooth transition towards InvestEU will be reassured. Consequently, the Programme aims to improve the functioning of the internal market. It provides a more flexible and agile financing framework with the aim of safeguarding a well-functioning internal market in the most cost-efficient way. In a context of budgetary constraints, the Union needs to seek synergies and prevent duplication and fragmentation in its support for the internal market. It also needs to give greater visibility and coherence to its action towards individuals, consumers, businesses and competent authorities, who may find the wide range of different tools and support programmes confusing. The Programme will therefore provide the budgetary means to support the establishment of a deeper and fairer internal market through a streamlined and flexible financing framework. Given that a number of initiatives in the Programme are new and that the conditions in the area of competition are particularly affected by dynamic developments in the internal market, the pace and magnitude of which are difficult to estimate, it is anticipated that flexibility will be required to face the evolving needs under this part of the Programme. In addition, the Programme establishes the financial framework for providing high-quality, comparable and reliable European statistics to underpin the design, monitoring and evaluation of all the Union policies. This replaces the predecessor European Statistical Programme. It must be underlined that, while it undoubtedly contributes to the delivery of internal market policies, European statistics have a much wider scope than the internal market, as they serve all policies of the Union. • Consistency with existing policy provisions The Programme contributes to the establishment of a deeper and fairer internal market, supporting the implementation of the Single Market and the Digital Market Strategies, the Capital Markets Union Action Plan and the New Deal for Consumers package. A strong Single Market is also seen as a precondition for a stronger Union as set out by the President of the Commission in his 2017 State of the Union speech. Strengthening the governance of the internal market also responds to numerous Council Conclusions and European Parliament Resolution on the Single Market. The most notable of these are the Competitiveness Council Conclusions of 29 February 2016 on the Single Market Strategy (Ref 6622/16) and the European Parliament Resolution of 26 May 2016 on the Single Market Strategy (Ref. 2015/2534 (INI)). • Consistency with other Union policies The proposed Programme is consistent with other proposed Union action programmes and funds that pursue similar objectives in related fields of competence. In particular, the actions under this Programme will be complementary to those of the Customs and Fiscalis Programmes which also aim to support and improve the functioning of the internal market.

The proposed Programme promotes synergies and complementarities in support for SMEs and entrepreneurship under the InvestEU Fund. For this purpose, in addition to the amount of EUR 1 000 million designated for non-financial instrument type of support for the competitiveness of SMEs under this Programme, an SME guarantee facility with a budget of EUR 2 000 million will be implemented under the SME window of InvestEU. The Programme is complementary to the support for SMEs and entrepreneurship under the European Regional Development Fund. The Programme seeks synergies with the Horizon Europe and the Space Programme in encouraging SMEs to benefit from breakthrough innovation and other solutions developed under those programmes. The Programme is also complementary to the Digital Europe Programme which aims to promote the digitalisation of the Union economy and the public sector. In addition, the proposed Programme, will seek synergies with the Justice, Rights and Values Fund which aims to support the further development of a European area of justice for the effectiveness of national justice systems, a key enabler of a fair and cost effective European economy. The proposed Programme is consistent with Erasmus and the European Union Solidarity Fund as well as the European Social Fund Plus. It will act as a catalyst for mobility in the labour market and among young people, which is essential for the well-functioning internal market. Finally, the food chain actions supported under the proposed Programme, such as veterinary and phytosanitary measures to address animal and plant health crises, could be complemented by market-based interventions from Union’s Common Agriculture Policy budget. Where relevant the Programme's actions should be used to address market failures or sub-optimal investment situations, in a proportionate manner, without duplicating or crowding out private financing and have a clear European added value. This will ensure consistency between the actions of the programme and EU State aid rules, avoiding undue distortions of competition in the internal market. This proposal provides for applying the Regulation from 1 January 2021. It is presented for a Union of 27 Member States. This is in line with the notification by the United Kingdom of its intention to withdraw from the European Union and Euratom based on Article 50 of the Treaty on European Union. The notification was received by the European Council on 29 March 2017. 2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY According to settled caselaw, the choice of the legal basis for a European Union measure must be based on objective factors amenable to judicial review. Where the Treaty contains a more specific provision that is capable of constituting the legal basis for the measure in question, the measure must be founded on that provision. If examination of a measure reveals that it pursues two aims or that it has two components, and if one of those aims or components is identifiable as the main one, whereas the other is merely incidental, the measure must be founded on a single legal basis, namely that required by the main or predominant aim or component. Regarding a measure that simultaneously pursues a number of objectives, or that has several components which are inseparably linked without one being incidental to the other, the Court has held that, where various provisions of the Treaty are therefore applicable, such a measure will have to be founded, exceptionally, on the various corresponding legal bases. Recourse to a dual legal basis is not possible where the procedures laid down for each legal basis are incompatible with each other. The basic acts establishing programmes currently in force which will be integrated into the Programme are based on different legal bases. These concern the following Articles of the Treaty on the Functioning of the European Union (TFEU): ·Article 114 for activities supporting financial reporting and auditing (and a large number of internal market measures that contain ancillary financing provisions); ·Article 169 (2)(b) concerning consumer protection; ·Articles 43 and 168 (4)(b) concerning veterinary and phytosanitary measures; ·Article 197 on administrative cooperation; ·Article 173 encouraging a favourable environment for the development of undertakings, particularly SMEs; ·Article 195 concerning tourism; and ·Article 338 on statistics. In light of the synergies obtained, merging the previous programmes has resulted in the proposal simultaneously pursuing four objectives that are inseparably linked without one being incidental to the other. The objectives are: ·the internal market (Article 114 TFEU); ·veterinary and phytosanitary measures (Articles 43 and 168 (4) (b) TFEU);

·encouraging a favourable environment for the development of undertakings, particularly SMEs (Article 173 TFEU); and ·statistics for the Union policies (Article 338 TFEU). Consequently, the legal bases of this Programme are Article 114, Articles 43(2) and 168(4)(b); and Articles 173 and 338 of TFEU. • Subsidiarity Establishing a deeper and fairer internal market requires a well-functioning regulatory framework, informed and empowered individuals, consumers and businesses and a competitive industrial eco-system. This cannot be achieved by the Union or Member States acting alone. Even if Member States are primarily responsible for delivering the internal market on the ground, the Commission, as guardian of the Treaties, and the Union as a whole have an interest in ensuring that these goals are delivered in a coherent way so and that individuals, consumers and businesses enjoy the same rights and opportunities throughout Europe. Action is required at Union level to ensure the consistent development of the internal market; non-discrimination; consumer protection; effective competition; the development of Member States’ capabilities and of cooperation between them; and the tackling of cross-border issues. Common rules and European cooperation are needed to enable the Commission and the competent authorities of the Member States to work in a coherent way at operational level. Such a high degree of cooperation and coordination can be achieved only through a centralised approach, ideally at Union level. The activities of the proposed Programme are more cost-effective than if each participating Member State were to set up individual cooperation frameworks on a bilateral or multilateral basis. By pooling resources the Programme builds on economies of scale. This makes it possible at the same time to deepen trust in the internal market among the public, consumers, businesses and the competent authorities of the Member States. In addition, the need for Union intervention was already well established under the predecessor programmes. The proposed Programme will not alter that rationale. Consequently, this Programme can only be established at Union level as the actions require active cooperation and coordination between Member States. • Proportionality The proposed Programme will help to effectively enforce and modernise the Union legal framework and to adapt it rapidly to the ever-changing environment. This will be done, among other things, through data-gathering and analyses, studies, evaluations and policy recommendations. More than half of the proposed budget will be spent on capacity-building activities and on the facilitation of joint actions between Member States and between their competent authorities and the Commission and the decentralised Union agencies. Furthermore, the Programme will finance mechanisms allowing individuals, consumers and business representatives to contribute to decision-making processes. It will also strengthen the exchange and dissemination of expertise and knowledge. The Programme will support very specific types of actions in the following areas: improving competitiveness, notably of SMEs, as well as standardisation and emergency measures in the context of the food chain. In addition, the Programme provides a framework for financing the development, production and dissemination of European statistics within the meaning of Article 13 of Regulation (EC) No 223/2009. None of the actions goes beyond what is absolutely necessary to achieve the Programme’s objectives in establishing a well-functioning internal market, promoting the competitiveness of SMEs and producing European statistics. The actions are based on analysis of actual needs on the ground but also take into account the legal requirements (e.g. emergency veterinary and phytosanitary measures, European statistics). The Commission will exercise coordinating, executive and management functions, as laid down in the Treaties. Consequently, the objectives of the Programme will be achieved in a much more proportionate manner at Union level than at the level of Member States. Paragraph 3.3 of the Impact Assessment makes reference to the Union value added. • Choice of the instrument

As the Impact Assessment concludes, Union intervention through a funding programme is appropriate. Merging all the predecessor programmes, activities financed previously under budgetary lines dealing with the internal market, the competitiveness of SMEs and European statistics into one single Programme will improve the coherence and integration of actions. At the same time it will reduce the number of divergent and fragmented financing rules. In accordance with the legislative policy the Commission has adopted under the MFF, the funding programme is proposed as a Regulation. 3.RESULTS OF RETROSPECTIVE EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS • Retrospective evaluations/fitness checks of existing legislation The proposed Programme builds on lessons learned from the evaluations of the predecessor programmes. It also takes into account the results of evaluations and public consultations on activities financed previously under internal market budgetary lines or assessing the need for the implementation of the new ones. In particular, it is worth noting that only 6 % of EU citizens feel well informed about their rights as a citizen of the Union and only 36 % feel fairly well informed. In the public consultation on the Single Digital Gateway, 80 % of businesses found complying with national requirements in other countries difficult. 60 % of individuals found it difficult or somewhat difficult to know which national requirements they had to comply with when moving to another Member State. The REFIT evaluation of the functioning of market surveillance for products also revealed a lack of awareness of rules among businesses and little transparency on product compliance. The evaluation found that non-compliance is driven by, among other things, the fragmentation of the organisation of market surveillance in the Union. The financing of joint actions by market surveillance authorities needs a more coherent coordination framework in order to reduce non-compliant products in the internal market. With regard to competition policy, ‘Eurobarometer’ surveys in 2010 and 2014 showed that public lacked awareness of where to turn when faced with higher prices, fewer products or supplier choices or lower quality. In addition, a 2016 Eurobarometer survey showed only limited knowledge and awareness of State aid rules. The evaluation of the Consumer Programme pointed to its slowness to respond to new market challenges driven by fast and often unpredictable societal and technological change. The evaluation also highlighted specific limitations in certain Member States, which prevent optimal uptake, typically due to limited resources. The mid-term evaluation of the Food Chain Programme showed that all activities receiving Union financial support in this area remained essential to human, animal and plant health throughout the food chain. This Programme had also proven flexible in addressing emerging needs for co-financing, especially outbreaks of animal diseases and plant pests. Finally, the ongoing evaluation of the European Statistical Programme shows that is necessary to develop a permanent capacity to respond faster to emerging new data needs. Globalisation, digitalisation and rapid technological change are challenging the foundations of measuring economic performance, i.e. Gross Domestic Product and key economic indicators. Therefore, substantial efforts also need to be invested in developing new methodologies. Data collection needs to be adapted to encompass all available data sources. • Stakeholder consultations The public consultation on the Multiannual Financial Framework proposal took place between 10 January and 9 March 2018. The questionnaire covered investment, research and innovation, SMEs and the internal market. Around 80 % of stakeholders considered that Union Programmes and funds added more value than could be achieved at national level. The internal market was considered the best example of the Union’s added value as it was considered a public good delivering real and tangible value. Among the most important challenges relevant to the Programme as identified by the wide majority of the respondents were: support for SMEs and for industrial development, fair competition and food safety. Generally speaking, between 20 % and 50 % of respondents considered that the Programme-related policies contribute fully or fairly well to addressing these challenges. Smooth circulation of goods in the Union received the highest score (50 % of all replies). Next came support for industrial development (42 %), provision of Union statistics (40 %) and support for capital flows and investments (39 %). Only 12 % of respondents considered that these policies were not successful at all. • Impact Assessment The design of the proposed Programme was the subject of the Impact Assessment. The following three overall scenarios were analysed: –Option 1: a business as usual scenario where implementation of the current multiannual programmes and budget lines continues, with the addition of the new spending proposals through separate basic acts. –Option 2: an integrated scenario where a new programme is adopted to deliver current and new programmes and budget lines falling within the programme’s scope. This is done through a single basic act that is flexible enough to preserve specific legal and institutional requirements. –Option 3: a fully unified scenario; here all programmes within the programme’s scope are merged into a single common basic act with identical legal and institutional requirements for all activities within its scope.

Option 2 — a new, integrated Programme — was considered the preferred option. It was recognised that it would mean for a less ambition than option 3, but was a feasible and pragmatic way of achieving additional simplification, flexibility and synergies across the programmes and budget lines within its scope. At the same time, it would make it possible to accommodate the specific legal and institutional requirements for governance of those individual programmes. Examples are the emergency veterinary and phytosanitary measures and the European Statistical Programme, which have dedicated institutional and governance settings of no relevance to other parts of the Programme. The Impact Assessment received a positive opinion by the Regulatory Scrutiny Board. However, the Board issued several considerations and recommendations for improvements, which were addressed in the following way: RSB recommendations Revisions introduced The report should be updated to reflect and explain the latest decisions regarding the scope of the programme. Section 1.1 ‘scope and context’ has been expanded to reflect the scope of the Single Market Programme. In the introduction, the report could better explain the nature of the programme-specific annexes. It should fix inconsistencies between the annexes and the report. It should include findings which are significant for the Single Market Programme budget from the annexes in the main report. It should spell out the changes within the individual programmes which will be implemented in the next period. It should also reflect stakeholder input more clearly in the presentation of the policy context and new priorities. The report should explain how the concerns expressed in particular in terms of prioritisation are properly reflected, e.g. with regard to health and to a safe and sustainable food chain. The nature of the programme-specific annexes have been clarified in section 1.1 ‘Scope and context’. Main findings from SMP (sub)programmes have been clarified in the main IA report in table (1.3, Main lessons learned in programmes and budget lines included in the Single Market Programme), and main changes to (sub)programmes have been added in table (2.1, Main adjustments in existing programmes/budget lines). In addition, stakeholder views have been clarified. The report lays out common priorities of the Single Market Programme but could discuss more the prioritisation between them and between the sub-programmes. As such, the analysis could reflect the scenarios for cutting activities and/or achieving synergy gains in order to cope with a possibly limited budget. Section 3.3 about ‘possible prioritisations in response to the EU27 baseline scenario’ has been added to the report. The report could better explain the coherence and potential synergies between the instruments of the Single Market Programme and other MFF programmes. ‘Exclusions from the scope and coherence with other MFF programmes’ under section 1.1 has been expanded with additional information about coherence and potential synergies with other programmes. • Simplification As explained above, the proposed Programme brings together activities previously financed under six predecessor programmes, including the European Statistical Programme, but also activities previously financed under several Commission budget lines dealing with the internal market. The Programme also includes new initiatives which aim to improve the functioning of the internal market. Consequently, the proposed Programme streamlines and exploits synergies between the various actions. It also provides a more flexible and agile financing framework aimed at safeguarding and deepening a well-functioning internal market most cost-efficiently. • Fundamental rights The Programme ensures the full respect of the rights and principles set out in the Charter of Fundamental Rights of the European Union and contributes to the implementation of several of those rights. In particular, the objectives of the Programme are notably to ensure citizens’ health in accordance with Article 35 of the Charter and consumer protection in accordance with Article 38 of the Charter. It also contributes to the right to effective remedy and fair trial as prescribed by Article 47 of the Charter. The Programme also aims to reinforce the freedom to conduct business in accordance with Union law and national laws and practices (Article 16). 4.BUDGETARY IMPLICATIONS On 2 May 2018, the Commission adopted a proposal for the next Multi-Annual Financial Framework for the period starting in 2021. In accordance with this proposal, this Regulation contains a budgetary framework of EUR 4 088 580 000 (in current prices) for the period starting in 2021. 5.OTHER ELEMENTS • Implementation plans and monitoring, evaluation and reporting arrangements The proposed Programme will be mainly implemented by direct management, using in particular grants, prizes and procurement. Parts of the Programme are expected to be implemented by executive agencies. These concern in particular activities with regard to the competitiveness of businesses and SMEs and relating to training in the area of health of humans, animals and plants along the food chain, and to the support of the welfare of animals. The impact of the Programme will be assessed through mid-term and final evaluations as well as by continuous monitoring of a set of high-level key performance indicators. These evaluations will be carried out in line with paragraphs 22 and 23 of the Interinstitutional Agreement of 13 April 2016, where the three institutions confirmed that evaluations of existing legislation and policy should provide the basis for impact assessments of options for further action. The evaluations will assess the Programme's effects on the ground based on indicators and targets and on a detailed analysis of the degree to which the instrument can be deemed relevant, effective, and efficient, provides enough Union added value and is coherent with other Union policies. They will include lessons learnt to identify potential gaps or problems, as well as the potential for further improvement of the actions or their results, and to help maximising their impact. The Programme’s results and outputs will be regularly assessed through a comprehensive monitoring system, based on defined indicators, with a view to ensuring value for money. Since the Programme mostly plays a supporting role, assisting Member State administrations in the sharing of information and boosting their capacity, the monitoring system focuses among other things on following the progress of the Programme’s activities through output indicators. • Detailed explanation of the specific provisions of the proposal Chapter I General provisions The scope of the Programme covers the area of the internal market, the competitiveness of SMEs and European statistics in a comprehensive manner. The Programme-specific objectives concern:

·making the internal market work better; ·improving the competitiveness of businesses, especially SMEs; ·increasing standardisation; ·promoting the interests of consumers; ·contributing to a high level of health for humans, animals and plants throughout the food chain; and ·producing and communicating high-quality statistics on Europe. The Programme will be open to participation by the Member States, European Free Trade Association (EFTA) members which are the members of the European Economic Area (EEA), acceding countries, candidate countries and potential candidates. In line with overall Union policy, countries covered by the European Neighbourhood Policy will also have the possibility to take part in the Programme under certain conditions. In addition, the Programme will be open to Switzerland in accordance with the conditions established in the Agreement between the European Community and the Swiss Confederation on cooperation in the field of statistics. The Programme will be implemented through the most commonly used spending mechanisms of the Union budget, namely public procurement and grants. Chapter II Grants This Chapter indicates generic types of actions which will apply to all specific objectives. These include: ·support for the effective enforcement and modernisation of the Union legal framework through data-gathering and analyses; ·studies and evaluations; ·capacity-building activities and facilitation of joint actions between Member States and between their competent authorities and the Commission and the decentralised Union agencies; ·financing of mechanisms allowing individuals, consumers and business representatives to contribute to decision-making processes; and ·strengthening the exchange and dissemination of expertise and knowledge. In addition, this Chapter lists very specific and targeted strictly limited types of actions in the following areas: improvement of competitiveness, notably of SMEs; standardisation and emergency measures along the food chain. Moreover, this Chapter lists the specific activities for implementing the framework for financing the development, production and dissemination of European statistics within the meaning of Article 13 of Regulation (EC) No 223/2009. In order to achieve maximal simplification, this Chapter stipulates either additional conditions or derogations from the Financial Regulation concerning eligibility requirements for entities, exceptions from the requirement of call for proposals, co-financing rules, eligible costs, etc. Chapter III Programming, monitoring and evaluation Implementation of the Programme should be based on annual or multi-annual work programme or programmes. In view of the mid- to long-term nature of the objectives pursued, and building on experience gained over time, work programmes may cover several years. While not impacting the implementation of the Programme, multiannual work programmes will reduce the administrative burden.

A list of core indicators has been added in Annex IV to improve the monitoring of the Programme and its performance from the outset. The Commission will be empowered to adopt delegated acts in order to amend the monitoring and evaluation framework and the list of indicators where necessary. The Commission proposal for the 2021-2027 Multiannual Financial Framework set a more ambitious goal for climate mainstreaming across all Union programmes, with an overall target of 25% of Union expenditure contributing to climate objectives. The contribution of this Programme to the achievement of this overall target will be tracked through Union climate marker system at an appropriate level of disaggregation, including the use of more precise methodologies where these are available. The Commission will continue to present the information annually in terms of commitment appropriations in the context of the annual draft budget. To support the full utilisation of the potential of the Programme to contribute to climate objectives, the Commission will seek to identify relevant actions throughout the Programme preparation, implementation, review and evaluation processes. Interim and final evaluations will be carried out. Chapter IV Transitional and final provisions Coherent, effective and proportionate targeted information will be provided to multiple audiences, including the media and public. 2018/0231 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing the Programme for single market, competitiveness of enterprises, including small and medium-sized enterprises, and European statistics and repealing Regulations (EU) No 99/2013, (EU) No 1287/2013, (EU) No 254/2014, (EU) No 258/2014, (EU) No 652/2014 and (EU) 2017/826 (Text with EEA relevance) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 43(2), Article 168(4)(b) and Articles 114, 173 and 338 thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Having regard to the opinion of the European Economic and Social Committee, Having regard to the opinion of the Committee of the Regions, Acting in accordance with the ordinary legislative procedure, Whereas:

(1)The internal market is a cornerstone of the Union. Since its inception, it has proved a major contributor to growth, competitiveness and employment. It has generated new opportunities and economies of scale for European businesses, notably micro, small and medium sized enterprises (SMEs), and strengthened their industrial competitiveness. The internal market contributed to the creation of jobs and offered greater choice at lower prices for consumers. It continues to be an engine for building a stronger, more balanced and fairer economy. It is one of the Union's major achievements and its best asset in an increasingly global world. (2)The internal market has to continuously adapt to a rapidly changing environment of digital revolution and globalisation. A new era of digital innovation continues to provide opportunities for businesses and individuals, creates new products and business models but equally constitutes a challenge to regulation and enforcement. (3)The substantial body of Union legislation underpins the functioning of the internal market. This concerns, in particular, competitiveness, standardisation, consumer protection, market surveillance and food chain regulation but also rules concerning business, trade and financial transactions and the promotion of fair competition providing for a level playing field essential for the functioning of the internal market. (4)Still, barriers to the proper functioning of the internal market remain and the new obstacles emerge. Adopting rules is only a first step, but making them work is as important. This is ultimately a matter of citizens' trust in the Union, in its capacity to deliver, and ability to create jobs and growth while protecting the public interest. (5)Several programmes for Union action exist currently in the fields of competitiveness of enterprises including SMEs, consumer protection, customers and end-users in financial services, policy making in financial services and food chain. Some additional activities are financed directly under the internal market budget lines. It is necessary to streamline and exploit synergies between various actions and provide for a more flexible and agile framework to finance activities aiming to achieve a well-functioning internal market in the most cost-efficient manner. It is therefore necessary to establish a new programme bringing together activities financed previously under those other programmes and other relevant budget lines. The programme should also include new initiatives which aim to improve the functioning of the internal market. (6)The development, production and dissemination of European statistics are subject to a separate European Statistical Programme established by Regulation (EU) No 99/2013 of the European Parliament and of the Council. In order to provide continuity of producing and disseminating European statistics, the new programme should also include activities covered by the European Statistical Programme by providing a framework for the development, production and dissemination of European statistics. The new programme should establish the financial framework for European statistics to provide high-quality, comparable and reliable statistics on Europe in order to underpin the design, implementation, monitoring and evaluation of all Union policies. (7)It is therefore appropriate to establish a Programme for the internal market, competitiveness of enterprises, including micro, small and medium-sized enterprises, and European statistics (the 'Programme'). The Programme should be established for the duration of seven years from 2021 to 2027. (8)The Programme should support the design, implementation and enforcement of Union legislation underpinning the proper functioning of the internal market. The Programme should support the creation of the right conditions to empower all actors of the internal market: businesses, citizens including consumers, civil society and public authorities. To that end, the Programme should aim to ensure the competitiveness of businesses, notably SMEs, but also supporting the enforcement of consumer protection and safety rules and by raising the awareness of businesses and individuals by providing them with the right tools, knowledge and competence to make informed decisions and strengthen their participation in Union’s policy-making. Furthermore, the Programme should aim to enhance regulatory and administrative cooperation, notably through exchange of best practices, building of knowledge and competence bases, including the use of strategic public procurement. The Programme should also aim to support the development of high-quality international standards that underpin the implementation of Union legislation. This also includes standard setting in the field of financial reporting and audit, thereby contributing to the transparency and well-functioning of the Union’s capital markets and to enhancing investor protection. The Programme should support rulemaking and standard setting also by ensuring the broadest possible stakeholder involvement. The objective of the Programme should also be to support the implementation and enforcement of Union legislation providing for a high level of health for humans, animals and plants along the food chain and the improvement of the welfare of animals. (9)A modern internal market promotes competition and benefits consumers, businesses and employees. Making better use of the ever evolving internal market in services should help European businesses create jobs and grow across borders, offer wider choice of services at better prices, and maintain high standards for consumers and workers. To achieve this, the Programme should contribute to the removal of remaining barriers, and to ensure a regulatory framework that can accommodate new innovative business models. (10)Regulatory obstacles in the internal market have been removed for many industrial products through prevention mechanisms, the adoption of common rules and, where no such Union rules exist, through the principle of mutual recognition. In areas where no Union legislation exists, the principle of mutual recognition means that goods that are lawfully marketed in one Member State enjoy the right to free movement and can be sold in another Member State. However, inadequate application of mutual recognition makes it harder for companies to access markets in other Member States. Despite the high degree of market integration in the area of goods, this leads to lost opportunities for the economy at large. The Programme should therefore aim to improve the application of mutual recognition in the area of goods and to reduce the number of illegal and non-compliant goods entering the market. (11)New regulatory and enforcement challenges relate to a rapidly changing environment of the digital revolution, concerning issues such as cybersecurity, internet of things or artificial intelligence. Should damage occur, stringent rules on product safety and liability are essential to ensure a policy response that allows European citizens, including consumers and businesses, to benefit from such rules. The Programme should therefore contribute to the rapid adaptation and enforcement of a Union product liability regime which fosters innovation. (12)Placing on the market of products that are not compliant with Union law puts those who comply at disadvantage and may endanger consumers. Many entrepreneurs disregard the rules either through lack of knowledge or intentionally to gain a competitive advantage. Market surveillance authorities are often underfunded and constrained by national boundaries, while entrepreneurs trade at Union or even global level. In particular, in the case of e-commerce, market surveillance authorities have great difficulties in tracing non-compliant products imported from third countries and identifying the responsible entity within their jurisdiction. The Programme should therefore seek to strengthen product compliance by providing the right incentives to entrepreneurs, intensifying compliance checks and promoting closer cross-border cooperation among enforcement authorities. The Programme should also contribute to the consolidation of the existing framework for market surveillance activities, encourage joint actions of market surveillance authorities from different Member States, improve the exchange of information and promote convergence and closer integration of market surveillance activities. (13)Product safety is a common concern. The conformity assessment bodies verify whether products meet the safety requirements before they are placed on the market. It is therefore of paramount importance that the conformity assessment bodies are reliable and competent. The Union has put in place a system of accreditation of the conformity assessment bodies, verifying their competence, impartiality and independence. The main challenge is now to keep the accreditation system in line with the latest state of the art and to ensure that it is applied with the same stringency across the Union. The Programme should therefore support measures to ensure that conformity assessment bodies continue fulfilling the regulatory requirements and to enhance the European accreditation system, in particular in new policy areas, by supporting the European co-operation for Accreditation (EA) referred to in Article 14 of Regulation (EC) No 765/2008 of the European Parliament and of the Council. (14)As consumer markets know no borders with the development of online trade and travel services, it is important to ensure that consumers residing in the Union can benefit from adequate protection when importing goods and services from economic operators based in third countries. The Programme should therefore allow supporting cooperation with relevant bodies located in key trading third country partners of the Union where necessary. (15)Public procurement is used by public authorities to ensure value for public money spent and to contribute to a more innovative, sustainable, inclusive and competitive internal market. Directive 2014/23/EU of the European Parliament and of the Council, Directive 2014/24/EU of the European Parliament and of the Council and Directive 2014/25/EU of the European Parliament and of the Council provide the legal framework for the integration and effective functioning of the public procurement markets representing 14% of Union’s gross domestic product, to the benefit of public authorities, businesses as well as citizens, including consumers. The Programme should therefore support measures to ensure a wider uptake of strategic public procurement, the professionalisation of public buyers, improved access to procurement markets for SMEs, increase of transparency, integrity and better data, boosting the digital transformation of procurement and promotion of joint procurement, through strengthening a partnership approach with the Member States, improving data gathering and data analysis including through development of dedicated IT tools, supporting exchange of experiences and good practices, providing guidance, pursuing beneficial trade agreements, strengthening cooperation among national authorities and launching pilot projects. (16)In order to meet the objectives of the Programme and to facilitate the lives of citizens and businesses, high-quality user-centric public services need to be put in place. This implies that public administrations will need to start working in new ways, bring down silos between the different parts of their administrations, and to engage in the co-creation of these public services with citizens and businesses. Moreover, the continuous and steady increase of cross-border activities in the internal market requires provision of up-to-date information on the rights of businesses and citizens, but also information explaining the administrative formalities. In addition, provision of legal advice and helping to solve problems which occur at cross national level becomes essential. Furthermore, connecting national administrations in a simple and efficient manner as well as evaluating how the internal market works on the ground is necessary. The Programme should therefore support the following existing internal market governance tools: the Your Europe Portal which should be a backbone of the upcoming Single Digital Gateway, Your Europe Advice, SOLVIT, the Internal Market Information system and the Single Market Scoreboard in order to improve citizens' daily lives and businesses' ability to trade across borders. (17)The Programme should support the development of the Union regulatory framework in the area of company law and corporate governance, as well as contract law, with a view to make business more efficient and competitive while providing protection for stakeholders affected by company operations, and to react to emerging policy challenges. It should also ensure appropriate evaluation, implementation and enforcement of the relevant acquis, inform and assist stakeholders and promote information exchange in the area. The Programme should further support the Commission's initiatives in favour of a clear and adapted legal framework for the data economy and innovation. Those initiatives are necessary to enhance legal certainty with regard to contractual and extra contractual law, in particular with regard to liability and ethics in the context of emerging technologies, such as internet of things, artificial intelligence, robotics, 3D Printing. The Programme should aim at stimulating the development of data-driven business, as it will be decisive for the position of the Union economy in a global competition. (18)The Programme should also promote the correct and full implementation and application of the Union legal framework for anti-money laundering and countering terrorism financing by the Member States and the development of future policies to address new challenges in the field. It should also support the relevant activities of the international organisations of European interest, such as the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism of the Council of Europe. (19)The implementation and development of the internal market in the area of financial services, financial stability and the Capital Markets Union including sustainable finance, highly depends on the evidence based policy measures taken by the Union. In order to achieve this objective, the Commission should have an active role in constantly monitoring financial markets and financial stability, assessing the implementation of Union legislation by Member States, evaluating whether the existing legislation is fit for purpose and identifying potential areas of action where new risks emerge, with a continuous involvement of stakeholders throughout the policy cycle. Such activities rely on the production of analyses, studies, training materials, surveys, conformity assessments, evaluations and statistics and are supported by IT systems and communication tools. (20)Considering that the internal market as set out in Article 3 of the Treaty on European Union includes a system ensuring that competition is not distorted, the Programme should support the Union’s competition policy, networks and cooperation with national authorities and courts, as well as outreach to a wider group of stakeholders in communicating and explaining the rights, benefits and obligations of Union competition policy.

(21)The Programme in particular needs to tackle the radical implications for competition and the functioning of the internal market resulting from the ongoing transformation of the economy and business environment, in particular through the exponential growth and use of data, taking account of the increasing recourse to artificial intelligence and other IT tools and expertise by companies and their advisors. It is also essential that the Programme supports networks and cooperation with Member State authorities and courts, considering that undistorted competition and the functioning of the internal market depend critically on action by those entities. In view of the particular role of competition policy in preventing harm to the internal market resulting from anticompetitive conduct beyond the Union’s border, the Programme should also support cooperation with third country authorities, as appropriate. Finally, widening outreach activities is necessary in order to allow more citizens and businesses to reap the full benefits of fair competition in the internal market. Given that a number of initiatives in the Programme are new and that the competition part of the Programme is particularly affected by dynamic developments in the conditions of competition in the internal market, notably relating to Artificial Intelligence, algorithms, big data, cybersecurity and forensic technology, the pace and magnitude of which are difficult to estimate, it is anticipated that flexibility will be required to face the evolving needs under this part of the Programme. (22)Strengthening the competitiveness of European enterprises while reassuring an effective level playing field and an open and competitive internal market is of outmost importance. SMEs are the engine of the European economy making up 99% of all businesses in Europe, providing two thirds of jobs, and contributing substantially to the creation of new jobs with a regional and local dimension. (23)SMEs share common challenges that do not affect larger firms to the same extent to obtain finance, to find skilled work force, to alleviate administrative burden, to take-up creativity and innovation, to access markets and foster internationalisation activities. The Programme should address such market failures proportionally, while not unduly distorting competition in the internal market. (24)Many of the Union's competitiveness problems involve SMEs' difficulties in obtaining access to finance because they struggle to demonstrate their credit-worthiness and have insufficient collateral. Additional financing challenges arise from SMEs' need to stay competitive by engaging e.g. in digitization, internationalization and innovation activities and skilling up their workforce. Limited access to finance has a negative effect on businesses creation, growth and survival rates, as well as on the readiness of new entrepreneurs to take over viable companies in the context of a business succession. (25)To overcome these market failures and to ensure that SMEs continue to play their role as the foundation for the Union economy´s competitiveness, small and medium sized enterprises need extra support through debt and equity instruments to be established under the SME window of the InvestEU Fund established by Regulation […] of the European Parliament and of the Council. The loan guarantee facility put in place under Regulation (EU) No 1287/2013 of the European Parliament and of the Council has a proven added value and is expected to bring a positive contribution to at least 500 000 SMEs; a successor will be established under the SME window of the InvestEU Fund. (26)The policy objectives of this Programme will be also addressed through financial instruments and budgetary guarantee under the SME window of the InvestEU Fund. Financial support should be used to address market failures or sub-optimal investment situations, in a proportionate manner and actions should not duplicate or crowd out private financing or distort competition in the internal market. Actions should have a clear European added value. (27)The Programme should provide effective support for SMEs throughout their life-cycle. It should build on the unique knowledge and expertise developed with regard to SMEs and industrial sectors and on a long experience in working with European, national and regional stakeholders. This support should build on the successful experience of the Enterprise Europe Network as a one-stop-shop to improve SMEs competitiveness and develop their business in the Single Market and beyond. The Network plans to continue delivering services on behalf of other Union programmes, notably for the Horizon2020 programme, using the financial resources of these programmes. Also the mentoring scheme for new entrepreneurs should remain the tool to enable new or aspiring entrepreneurs to gain business experience by matching with an experienced entrepreneur from another country and thus allow strengthening entrepreneurial talents. The Programme should further strive to grow and extend its geographical coverage and thus offer wider range of matching possibilities to entrepreneurs in complementarity with other Union initiatives where relevant. (28)Clusters are a strategic tool for supporting the competitiveness and scaling-up of SMEs as they offer favourable business environments. Joint Cluster Initiatives should achieve critical mass to accelerate the growth of SMEs. By connecting specialised eco-systems, clusters create new business opportunities for SMEs and integrate them better in European and global strategic value chains. Support should be provided for the development of transnational partnership strategies and the implementation of joint activities, supported by the European Cluster Collaboration Platform. Sustainable partnering should be encouraged with continuation funding if performance and participation milestones are reached. Direct support to SMEs should be channelled through cluster organisations for the following: uptake of advanced technologies, new business models, low-carbon and resource-efficient solutions, creativity and design, skills upgrading, talent attraction, entrepreneurship acceleration, and internationalisation. Other specialised SME support actors should be associated to facilitate industrial transformation and implementations of smart specialisation strategies. The Programme should thus contribute to growth and build linkages with the Union's (digital) innovation hubs and investments made under Cohesion Policy and Horizon Europe. Synergies with the Erasmus programme can also be explored. (29)Creativity and innovation are crucial for the competitiveness of the Union's industrial value chains. They represent catalysts for industrial modernisation and contribute to smart, inclusive sustainable growth. However, uptake by SMEs is still lagging behind. The Programme should therefore support targeted actions, networks and partnerships for creativity-driven innovation throughout the industrial value chain. (30)European standards play an important role in the internal market. They are of vital interest for the competitiveness of undertakings, and especially SMEs. They are also a crucial tool to support Union legislation and policies in a number of key areas such as energy, climate change, information and communication technology, sustainable use of resources, innovation, product safety, consumer protection, worker's safety and working conditions and ageing population, thus positively contributing to the society as a whole. (31)European standardisation activities are governed by Regulation (EU) No 1025/2012 of the European Parliament and of the Council and implemented through a long standing Public-Private-Partnership which is fundamental to achieve the objectives set in that Regulation as well as in general and sectorial Union standardisation policies. (32)A well-functioning common financial reporting framework is essential for the internal market, for the effective functioning of the capital markets and for the realisation of the integrated market for financial services in the context of the Capital Markets Union. (33)In accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council, International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board and related interpretations from the IFRS Interpretations Committee are to be incorporated into Union law in order to be applied by companies with securities listed on a regulated market in the Union, only if IFRS meet the criteria set out in that Regulation, including the requirement that accounts give a ‘true and fair view’ as laid down in Article 4(3) of Directive 2013/34/EU of the European Parliament and of the Council and that they are conducive to the European public good. Such international accounting standards need to be developed under a transparent and democratically accountable process. IFRS therefore plays a major role in the functioning of the internal market and thus the Union has a direct interest in ensuring that the process through which IFRS are developed and approved delivers standards that are consistent with the requirements of the legal framework of the internal market. It is therefore important to establish appropriate funding arrangements for the IFRS Foundation. (34)Taking into account the European Financial Reporting Advisory Group's (EFRAG) role in assessing whether IFRS comply with the requirement of Union law and policy, as laid down in Regulation (EC) No 1606/2002, it also is necessary for the Union to ensure EFRAG’s stable financing and thus contribute to its funding. The technical work of EFRAG should be focused on technical advice to the Commission on the endorsement of IFRS as well as on the appropriate participation in the process of development of such IFRS and should ensure that Union interests are adequately taken into account in the international standard-setting process. Those interests should include the notion of ‘prudence’, the maintenance of the requirement of a ‘true and fair view,’ as laid down in Directive 2013/34/EU, and of the European public good as laid down in Regulation (EC) No 1606/2002, taking into account the impact of IFRS on financial stability and the economy. A European Corporate Reporting Lab should also be established as part of the European Financial Reporting Advisory Group (EFRAG), to promote innovation and the development of best practices in corporate reporting. In this forum, companies and investors can share best practices notably in the field of non-financial and sustainability reporting. (35)In the field of statutory audit, the Public Interest Oversight Board (PIOB) was created in 2005 by the Monitoring Group, an international organisation responsible for monitoring the governance reform of the International Federation of Accountants (IFAC). The role of the PIOB is to oversee the process leading to the adoption of International Standards on Auditing (ISAs) and other public interest activities of the IFAC. It is possible for ISAs to be adopted for their application in the Union provided, in particular, that they have been developed with due process, public oversight and transparency as required under Article 26 of Directive 2006/43/EC of the European Parliament and of the Council. Considering the introduction of ISAs in the Union and the key role of the PIOB in ensuring that they fulfil the requirements laid down in Directive 2006/43/EC, it is therefore important to ensure appropriate funding arrangements for the PIOB. (36)The Union contributes to ensuring a high level of consumer protection, empowering consumers and putting them at the heart of the internal market by supporting and complementing Member States’ policies in seeking to ensure that citizens when acting as consumers can fully reap the benefits of the internal market and that, in so doing, their safety and legal and economic interests are properly protected by means of concrete actions. The Union has also to ensure that consumer and product safety laws are properly and equally enforced on the ground and that businesses enjoy a level playing field with fair competition in the internal market. Moreover, it is necessary to empower, encourage and assist consumers in making sustainable choices, thus contributing to a sustainable, energy and resource efficient and circular economy. (37)The Programme should aim to raise the awareness of consumers, businesses, civil society and authorities on Union consumer and safety laws and to empower consumers and their representative organisations at national level and at the Union level notably by supporting the Bureau Européen des Unions de Consommateurs (BEUC) which is the long established and recognised NGO representing consumer interests in relation to all relevant Union policies, and the European Association for the Co-ordination of Consumer Representation in Standardisation (ANEC) which represents consumers interest in relation to standardisation issues. In doing so, particular attention should be given to new market needs regarding the promotion of sustainable consumption and the prevention of vulnerabilities as well as challenges created by the digitisation of the economy or the development of new consumption patterns and business models. The Programme should support the development of relevant information on markets, policy challenges, emerging issues and behaviours, and the publication of the Union consumer scoreboards. (38)The Programme should support national competent authorities, including those responsible for monitoring product safety, who cooperate notably via the Union’s rapid alert system for dangerous products. It should also support the enforcement of Directive 2001/95/EC of the European Parliament and of the Council and Regulation (EC) No 765/2008 regarding consumer protection and product safety, and the Consumer Protection Cooperation network and international cooperation between the relevant authorities in third countries and in the Union. The Programme should also aim to ensure access for all consumers and traders to quality out of court dispute resolution and online dispute resolution and information on redress possibilities. (39)The European Consumer Centres Network is assisting consumers to obtain the benefit of their Union consumer rights when they purchase goods and services cross border in the Internal Market and EEA, either on-line or when travelling. The 30 centres strong network, jointly funded by the Union consumer programmes since more than 10 years has proven its added value to strengthen consumers and traders trust in the Internal Market. It deals with more than 100 000 consumers’ requests per year and reaches millions of citizens via its press and online information activities. It is one of the most valued citizens’ assistance network of the Union and most of its centres host contact points for internal market law, such as the Directive 2006/123/EC of the European Parliament and of the Council and its evaluation stresses the importance to continue its operation. The network also intends to develop reciprocity arrangements with similar bodies in third countries. (40)The fitness check of Union consumer and marketing law carried out by the Commission in May 2017 exposed the need to better enforce rules and facilitate redress when consumers have been harmed by breaches to consumer laws. As a result the Commission adopted a "New Deal for Consumers" in April 2018 to ensure, inter alia, the equal treatment of consumers across the internal market in relation to dual quality standards, stronger enforcement capacities of Member States, enhanced product safety, increased international cooperation and new possibilities for redress notably through representative actions by qualified entities. The Programme should aim to support consumer policy with awareness raising and knowledge building, capacity building and exchange of best practices of the consumer organisations and consumer protection authorities, networking and development of market intelligence, strengthening the evidence base on the functioning of the internal market for consumers, IT systems and communication tools, inter alia.

(41)Citizens are particularly affected by the functioning of financial services markets. These are a key component of the internal market and require a solid framework for regulation and supervision which ensures not only financial stability and a sustainable economy, but also provides a high level of protection to consumers and other financial services end users, including retail investors, savers, insurance policyholders, pension fund members and beneficiaries, individual shareholders, borrowers and SMEs. It is important to enhance their capacity to participate in policy making for the financial sector. (42)The Programme should therefore continue to support the specific activities covered by the 2017-2020 Capacity-Building Programme enhancing the involvement of consumers and other financial services end-users in Union policy-making, as set out in Regulation (EU) 2017/826 of the European Parliament and of the Council which continued the pilot programme and preparatory action of the years 2012-2017. This is necessary in order to provide policy makers with views from stakeholders other than financial sector professionals and ensure a better representation of the interests of consumers and other financial services end-users. This should result in better financial services policies, notably thanks to a better public understanding of the issues at stake in financial regulation and enhanced financial literacy. (43)In the context of a pilot project, between 2012 and 2013, and of a preparatory action, between 2014 and 2016, the Commission awarded grants to two organisations following an annual open call for proposals. The two organisations are Finance Watch, set up with Union grants in 2011 as an international non-profit association under Belgian law, and Better Finance, which is the product of successive re-organisations and rebranding of pre-existing European federations and shareholders since 2009. The Capacity-Building Programme established under Regulation (EU) 2017/826, identifies these same two organisations as sole beneficiaries. It is therefore necessary to continue to co-finance these organisations in the context of the Programme. However, this financing should be subject to review. (44)A high level of health protection through the food supply chain is necessary to allow the internal market to operate efficiently. A safe and sustainable food supply chain is a prerequisite for society and for the internal market. Cross border health crises and food scares disrupt the functioning of the internal market by limiting the movements of persons and goods and disrupting production. (45)The general objective of Union law in the food chain area is to contribute to a high level of health for humans, animals and plants along the food chain, to support the improvement of the welfare of animals, to contribute to a high level of protection and information for consumers and a high level of protection of the environment, including the preservation of biodiversity, while improving the sustainability of European food and feed productions, increasing quality standards across the Union, enhancing the competitiveness of the Union food and feed industry and favouring the creation of jobs. (46)Considering the specific nature of the actions concerning a high level of health for humans, animals and plants along the food chain special eligibility criteria concerning provision of grants and use of public procurement need to be provided in this Regulation. In particular, by way of derogation from Regulation (EU, Euratom) of the European Parliament and of the Council (the 'Financial Regulation'), as an exception to the principle of non-retroactivity, the costs for the emergency measures, due to their urgent and unforeseeable nature, should be eligible and include also costs incurred as a result of a suspected occurrence of a disease or pest provided that that occurrence is subsequently confirmed and notified to the Commission. The corresponding budgetary commitments and the payment of eligible expenditure should be made by the Commission, after signature of the legal commitments and after assessment of the payment applications submitted by the Member States. Costs should also be eligible for protection measures taken in the case of a direct threat to the status of health in the Union as a result of the occurrence or development, in the territory of a third country, a Member State or overseas countries and territories, of certain animal diseases and zoonoses as well as in respect of protection measures, or other relevant activities, taken in support of the health status of plants in the Union. (47)Official controls carried out by the Member States are an essential tool for verifying and monitoring that relevant Union requirements are being implemented, complied with and enforced. The effectiveness and efficiency of official control systems is vital for maintaining a high level of safety for humans, animals and plants along the food chain whilst ensuring a high level of protection of the environment and of animal welfare. Union financial support should be made available for such control measures. In particular, a financial contribution should be available to Union reference laboratories in order to help them bear the costs arising from the implementation of work programmes approved by the Commission. Moreover, since the effectiveness of official controls also depends on the availability to the control authorities of well trained staff with an appropriate knowledge of Union law, the Union should be able to contribute to their training and relevant exchange programmes organised by competent authorities. (48)High-quality European statistics developed, produced and disseminated under the European Statistical Programme are essential for evidence-based decision making European statistics should be available in a timely manner and should contribute to the implementation of Union policies as reflected in the Treaty on the Functioning of the European Union, notably strengthened and integrated economic governance, social, economic and territorial cohesion, sustainable development, agricultural policy, the social dimension of Europe and globalisation. (49)European statistics are indispensable for Union decision-making and for the measurement of the performance and impact of Union initiatives. Therefore, the continued provision and development of European statistics, taking a Union-wide approach and going beyond an internal market perspective should be ensured in order to cover all Union activities and policy areas, including empowering businesses and citizens to take informed decisions. (50)In view of its horizontal character, the European Statistical Programme is subject to specific requirements and notably those laid down in Regulation (EC) No 223/2009 of the European Parliament and of the Council, in particular with regard to the respect of statistical principles, the functioning of the European statistical system and its governance, including the role and tasks assigned to the European statistical system committee and to the Commission, the establishment and implementation of the programming of the statistical activities. (51)The Programme has been submitted for prior examination to the European Statistical System Committee in accordance with Regulation (EC) No 223/2009. (52)The Union and Member States are committed to the implementation of the United Nations 2030 Agenda for Sustainable Development. By contributing to the achievement of the 2030 Agenda, the Union and Member States will foster a stronger, more sustainable, inclusive, secure and prosperous Europe. The Programme should contribute to the implementation of the 2030 Agenda, including by balancing the economic, social and environmental dimensions of sustainable development. (53)Reflecting the importance of tackling climate change in line with the Union's commitments to implement the Paris Agreement and the United Nations Sustainable Development Goals, this Programme should contribute to mainstream climate actions and to the achievement of an overall target of 25 % of the Union budget expenditures supporting climate objectives. Relevant actions will be identified during the Programme's preparation and implementation, and reassessed in the context of the relevant evaluations and review processes. (54)This Regulation lays down a financial envelope for the Programme which is to constitute the prime reference amount, within the meaning of [reference to be updated as appropriate according to the new inter-institutional agreement: point 17 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management], for the European Parliament and the Council during the annual budgetary procedure. (55)The Agreement on the European Economic Area provides for cooperation in the fields subject to the Programme between the Union and its Member States, on the one hand, and the countries of the European Free Trade Association participating in the European Economic Area, on the other. Provision should also be made to open the Programme to participation by other countries, including the neighbouring countries of the Union and countries which are applying for, are candidates for or are acceding to, membership of the Union. In addition, in the field of European statistics, the Programme should be open to Switzerland in accordance with the Agreement between the European Community and the Swiss Confederation on cooperation in the field of statistics. (56)Third countries which are members of the European Economic Area (EEA) may participate in Union programmes in the framework of the cooperation established under the EEA agreement, which provides for the implementation of the programmes by a decision under that agreement. Third countries may also participate on the basis of other legal instruments. A specific provision should be introduced in this Regulation to grant the necessary rights for and access to the authorising officer responsible, the European Anti-Fraud Office (OLAF) as well as the European Court of Auditors to comprehensively exert their respective competences. (57)The Financial Regulation applies to this Programme. It lays down rules on the implementation of the Union budget, including rules on grants, prizes, procurement. (58)The actions implemented under the predecessor programmes and budget lines have proven to be adequate and should be retained. The new actions introduced under the Programme aim to reinforce in particular the well-functioning internal market. In order to provide more simplicity and flexibility in the execution of the Programme and thereby to better deliver on its objectives, the actions should be defined only in terms of overall, generic categories. Lists of indicative activities concerning specific objectives in the area of competitiveness, or specific activities stemming from regulatory requirements, like in the area of standardisation, food chain regulation and European statistics should also be included in the Programme. (59)It is necessary to specify certain categories of entities eligible for funding as well as those entities which should be eligible for funding without a call for proposals. (60)Considering the increasing interconnectivity of the world economy, the Programme should continue to provide the possibility of involving external experts, such as officials of third countries, representatives of international organisations or economic operators in certain activities.

(61)It is necessary to indicate special criteria concerning co-financing rules and eligible costs. (62)In line with the Commission's commitment, set out in its Communication of 19 October 2010 entitled 'The EU Budget Review', and in order to provide for coherence and simplification of funding programmes, resources should be shared with other Union funding instruments if the envisaged actions under the Programme pursue objectives which are common to various funding instruments, excluding however double financing. (63)This Programme should contribute to the overall support addressing specific needs of outermost regions and their integration in the internal market, as recently reconfirmed in the Commission's Communication "A stronger and renewed strategic partnership with the EU's outermost regions. (64)The Programme should promote synergies, while avoiding duplication with related Union programmes and actions. The actions under this Programme should be complementary to those of the Customs and Fiscalis Programmes established by Regulation (EU) […] of the European Parliament and of the Council and Regulation (EU) […] of the European Parliament and of the Council which also aim at supporting and improving the functioning of the internal market. (65)The Programme should promote synergies and complementarities with respect to the SMEs and entrepreneurship support under the European Regional Development Fund established by Regulation (EU) […] of the European Parliament and of the Council. Moreover, the SME window of InvestEU Fund established by Regulation (EU) […] of the European Parliament and of the Council will guarantee debt and equity support to enhance access and availability of finance for SMEs. The Programme should also seek synergies with the Space Programme established by Regulation (EU) […] of the European Parliament and of the Council in respect of encouragement of SMEs to benefit from breakthrough innovation and other solutions developed under those programmes. (66)This Programme should promote synergies with Horizon Europe established by Regulation (EU) No […] of the European Parliament and of the Council which aims to promote research and innovation. This should concern in particular complementarity with the actions of the future European Innovation Council for innovative companies, as well as the support of services for SMEs. (67)The Programme should promote synergies and complementarities with respect to the Digital Europe Programme established by Regulation (EU) […] of the European Parliament and of the Council which aims to promote the digitalisation of the Union economy and the public sector. (68)In addition, the Programme, should also seek synergies with the Justice, Rights and Values Fund established by Regulation (EU) […] of the European Parliament and of the Council which aims to support the further development of a European area of justice for the effectiveness of national justice systems, a key enabler of a fair and cost effective European economy. (69)This Programme should promote synergies with Erasmus programme established by Regulation (EU) […] of the European Parliament and of the Council, the European Union Solidarity Fund established by Regulation (EU) [...] of the European Parliament and of the Council and the European Social Fund Plus established by Regulation (EU) […] of the European Parliament and of the Council in the area of labour and youth mobility which is essential for the well-functioning internal market. (70)Finally, food chain actions such as veterinary and phytosanitary measures in case of animal and plant health crises could be complemented by market based interventions from the Union’s Common Agriculture Policy programming established by Regulation (EU) […] of the European Parliament and of the Council. (71)Where relevant the Programme's actions should be used to address market failures or sub-optimal investment situations, in a proportionate manner, without duplicating or crowding out private financing and have a clear European added value. (72)The implementing powers should be conferred on the Commission in respect of the adoption of work programmes implementing the actions contributing to a high level of health for humans, animals and plants along the food chain. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council . (73)The types of financing and the methods of implementation under this Regulation should be chosen on the basis of their ability to achieve the specific objectives of the actions and to deliver results, taking into account, in particular, the costs of controls, the administrative burden, and the expected risk of non-compliance. This should include consideration of the use of lump sums, flat rates and unit costs, as well as financing not linked to costs as referred to in Article 125(1) of the Financial Regulation. (74)To ensure regular monitoring and reporting, a proper framework for monitoring the actions and results of the Programme should be put in place from the very beginning. Such monitoring and reporting should be based on indicators, measuring the effects of the actions under the Programme against pre-defined baselines. (75)Pursuant to paragraph 22 and 23 of the Inter-institutional Agreement of 13 April 2016 on Better Law-Making, there is a need to evaluate this Programme on the basis of information collected through specific monitoring requirements, while avoiding overregulation and administrative burdens, in particular on Member States. These requirements, where appropriate, should include measurable indicators, as a basis for evaluating the effects of the Programme on the ground. (76)The list of animal diseases and zoonosis which qualify for funding under emergency measures and for funding under the eradication, control and surveillance programmes should be established on the basis of animal diseases referred to in Chapter 2 of Part I of Regulation (EU) 2016/429 of the European Parliament and of the Council, Regulation (EC) No 2160/2003 of the European Parliament and of the Council and Regulation (EC) No 999/2001 of the European Parliament and of the Council. (77)In order to take account of situations that are provoked by animal diseases that have a significant impact on livestock production or trade, the development of zoonoses which pose a threat to humans, or new scientific or epidemiological developments, as well as animal diseases, which are likely to constitute a new threat for the Union, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission, in respect of amending the list of animal diseases and zoonoses. In order to ensure effective assessment of progress of the Programme towards the achievement of its objectives the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of reviewing or complementing the indicators to measure the achievement of the specific objectives where considered necessary and to supplement this Regulation with provisions on the establishment of a monitoring and evaluation framework. It is of particular importance that the Commission carries out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts. (78)Pursuant to [reference to be updated as appropriate according to a new decision on OCTs: Article 94 of Council Decision 2013/755/EU], persons and entities established in overseas countries and territories are eligible for funding subject to the rules and objectives of the Programme and possible arrangements applicable to the Member State to which the relevant overseas country or territory is linked. (79)In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council, Council Regulation (Euratom, EC) No 2988/95,Council Regulation (Euratom, EC) No 2185/96 and Council Regulation (EU) 2017/1939, the financial interests of the Union are to be protected through proportionate measures, including the prevention, detection, correction and investigation of irregularities and fraud, the recovery of funds lost, wrongly paid or incorrectly used and, where appropriate, the imposition of administrative sanctions. In particular, in accordance with Regulation (EU, Euratom) No 883/2013 and Regulation (Euratom, EC) No 2185/96 the European Anti-Fraud Office (OLAF) may carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. In accordance with Regulation (EU) 2017/1939, the European Public Prosecutor's Office (EPPO) may investigate and prosecute fraud and other criminal offences affecting the financial interests of the Union as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council. In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the Union’s financial interests, to grant the necessary rights and access to the Commission, OLAF, the EPPO and the European Court of Auditors (ECA) and to ensure that any third parties involved in the implementation of Union funds grant equivalent rights. (80)Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 of the Treaty on the Functioning of the European Union apply to this Regulation. These rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, procurement, prizes, indirect implementation, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also concern the protection of the Union's budget in case of generalised deficiencies as regards the rule of law in the Member States, as the respect for the rule of law is an essential precondition for sound financial management and effective Union funding.

(81)Regulation (EU) 2016/679 of the European Parliament and of the Council governs the processing of personal data carried out in the Member States in the context of this Regulation and under the supervision of the Member States competent authorities. Regulation (EC) 45/2001 of the European Parliament and of the Council governs the processing of personal data carried out by the Commission within the framework of this Regulation and under the supervision of the European Data Protection Supervisor. Any exchange or transmission of information by competent authorities is to comply with the rules on the transfer of personal data as laid down in Regulation (EU) 2016/679 and any exchange or transmission of information by the Commission is to comply with the rules on the transfer of personal data as laid down in Regulation (EC) No 45/2001. (82)Since the objectives of this Regulation cannot be sufficiently achieved by the Member States due to the cross-border nature of the issues involved, but can rather, by reason of the greater potential of Union action, be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives. (83)The Programme should also be to ensure greater visibility and coherence of the Union’s internal market, competitiveness of enterprises including SMEs and European statistics actions towards European citizens, businesses and administrations. (84)Regulation (EU) No 99/2013, Regulation (EU) No 1287/2013, Regulation (EU) No 254/2014 of the European Parliament and of the Council, Regulation (EU) No 258/2014 of the European Parliament and of the Council, Regulation (EU) No 652/2014 of the European Parliament and of the Council, Regulation (EU) 2017/826, should be repealed with effect from 1 January 2021. (85)It is appropriate to ensure a smooth transition without interruption between the programmes in the fields of competitiveness of enterprises and SMEs, consumer protection, customers and end-users in financial services, policy making in financial services, food chain and European statistics, established by Regulation (EU) No 1287/2013, Regulation (EU) No 254/2014, Regulation (EU) 2017/826, Regulation (EU) No 258/2014, Regulation (EU) No 652/2014, Regulation (EU) No 99/2013 and this Programme, in particular regarding the continuation of multiannual measures and the evaluation of the previous programmes successes,



HAVE ADOPTED THIS REGULATION: CHAPTER I GENERAL PROVISIONS Article 1



Subject matter This Regulation establishes the programme for improving the functioning of the internal market and the competitiveness of enterprises, including micro, small and medium-sized enterprises and the framework for financing of development, production and dissemination of European statistics within the meaning of Article 13 of Regulation (EC) No 223/2009 (the 'Programme'). It lays down the objectives of the Programme, the budget for the period 2021 to 2027, the forms of Union funding and the rules for providing such funding. Article 2



Definitions For the purposes of this Regulation, the following definitions apply: (1)'Blending operation' means actions supported by the Union budget, including within blending facilities pursuant to Article 2(6) of the Financial Regulation, combining non-repayable forms of support and/or financial instruments from the Union budget with repayable forms of support from development or other public finance institutions, as well as from commercial finance institutions and investors; (2)'European statistics' means statistics developed, produced and disseminated in accordance with Regulation (EC) No 223/2009; (3)'legal entity' means any natural or legal person created and recognised as such under national law, Union law or international law, which has legal personality and which may, acting in its own name, exercise rights and be subject to obligations, or an entity without a legal personality in accordance with Article 197(2)(c) of Regulation (EU, Euratom) of the European Parliament and of the Council (the 'Financial Regulation'); (4)'micro, small and medium-sized enterprises' means micro, small and medium-sized enterprises as defined in Commission Recommendation 2003/361/EC in the version of 6 May 2003; (5)'third country' means a country that is not a member of the Union. Article 3



Programme objectives

1.The Programme has the following general objectives: (a)to improve the functioning of the internal market, and especially to protect and empower citizens, consumers and businesses, in particular micro, small and medium-sized enterprises (SMEs), by enforcement of Union law, facilitation of market access, standard setting, and by promoting human, animal and plant health and animal welfare; as well as to enhance cooperation between the competent authorities of Member States and between the competent authorities of Member States and the Commission and the decentralised Union agencies; (b)to provide high-quality, comparable and reliable statistics on Europe which underpin the design, monitoring and evaluation of all the Union policies and help policy makers, businesses, academia, citizens and media to make informed decisions and actively participate in the democratic process. 2.The Programme has the following specific objectives: (a)making the internal market more effective, facilitating the prevention and removal of obstacles, supporting the development, implementation and enforcement of the Union law in the areas of the internal market for goods and services, public procurement, market surveillance as well as in the areas of company law and contract and extra-contractual law, anti-money laundering, free movement of capital, financial services and competition, including the development of governance tools; (b)improving the competitiveness of enterprises with special emphasis on SMEs and achieving additionality through the provision of measures that provide various forms of support to SMEs, access to markets including the internationalisation of SMEs, favourable business environment for SMEs, the competitiveness of sectors, the modernisation of industry and the promotion of entrepreneurship; (c)ensuring the effective functioning of the internal market through standardisation processes that: (i)enable the financing of European standardisation and stakeholder participation in setting up European standards; (ii)support the development of high-quality international financial reporting and auditing standards, facilitate their integration into the Union law and promote the innovation and development of best practices in corporate reporting; (d)promoting the interests of consumers and ensuring a high level of consumer protection and product safety by: (i)empowering, assisting and educating consumers, businesses and civil society; ensuring a high level of consumer protection, sustainable consumption and product safety notably by supporting competent enforcement authorities and consumer representative organisations and cooperation actions; ensuring that all consumers have access to redress and; provision of adequate information on markets and consumers; (ii)enhancing the participation of consumers, other financial services end-users and civil society in financial services policy-making; promoting a better understanding of the financial sector; (e)contributing to a high level of health for humans, animals and plants along the food chain and in related areas, including by preventing and eradicating diseases and pests, and to support the improvement of the welfare of animals as well as a sustainable food production and consumption; (f)producing and communicating high quality statistics on Europe in a timely, impartial and cost-efficient manner, through enhanced partnerships within the European Statistical System referred to in Article 4 of Regulation (EC) No 223/2009 and with all relevant external parties, using multiple data sources, advanced data analytics methods, smart systems and digital technologies. Article 4



Budget 1.The financial envelope for the implementation of the Programme for the period 2021 to 2027 shall be EUR 4 088 580 000 in current prices. 2.Within the amount referred to in paragraph 1 the following indicative amounts shall be allocated to the following objectives: (a)EUR 1 000 000 000 to the objective referred to in Article 3(2)(b); (b)EUR 188 000 000 to the objective referred to in Article 3(2)(d)(i); (c)EUR 1 680 000 000 to the objective referred to in Article 3(2)(e);

(d)EUR 552 000 000 to the objective referred to in Article 3(2)(f). 3.The amount referred to in paragraph 1 may be used for technical and administrative assistance for the implementation of the Programme, concerning in particular preparatory, monitoring, control, audit and evaluation activities as well as use of information technology networks focusing on information processing and exchange, and use and development of corporate information technology tools. 4.For the objective referred to in Article 3(2)(e), budgetary commitments extending over more than one financial year, may be broken down over several years into annual instalments. 5.By derogation from Article 111(2) of the Financial Regulation, the Commission shall make the budgetary commitment for the grant awarded for veterinary and phytosanitary emergency measures under the specific objective referred to in Article 3(2)(e) of this Regulation after assessment of the payment applications submitted by Member States. 6.Resources allocated to Member States under shared management may, at their request, be transferred to the Programme. The Commission shall implement those resources directly in accordance with point (a) of Article 62(1) of the Financial Regulation or indirectly in accordance with point (c) of that Article. Where possible those resources shall be used for the benefit of the Member State concerned. Article 5



Third countries associated to the Programme The Programme shall be open to the following third countries: (a)European Free Trade Association (EFTA) members which are members of the European Economic Area (EEA), in accordance with the conditions laid down in the EEA agreement; (b)acceding countries, candidate countries and potential candidates, in accordance with the general principles and general terms and conditions for their participation in Union programmes established in the respective framework agreements and Association Council decisions, or similar agreements, and in accordance with the specific conditions laid down in agreements between the Union and