A4-0161/96

Resolution on the Commission recommendation on payment periods in commercial transactions (C(95)1075 - C4-0198/95)

The European Parliament,

- having regard to the Commission recommendation on payment periods in commercial transactions (C(95)1075 - C4-0198/95) ((OJ L 127, 10.6.95, p. 19 and OJ C 144, 10.6.1995, p. 3.)),

- having regard to its resolution of 24 October 1994 ((OJ C 323, 21.11.1994, p. 19.)) on the Commission communication on the implementation of an integrated programme in favour of SMEs and the craft sector,

- having regard to the deliberations of its public hearing on late payments, held on 24 January 1996,

- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy and the opinion of the Committee on Legal Affairs and Citizen's Rights (A4-0161/96),

A. whereas there has been a deterioration in payment practices in almost all Member States of the European Union in recent years, a fact witnessed by the experts invited to the public hearing on the subject,

B. whereas differences between payment rules and practices in the Member States reflect not only the changing structural trend in business relations, changing business culture and divergent legal systems, but also reflect the dominant position of certain undertakings,

C. whereas late payment is a breach of contract involving an involuntary loan from the creditor to the debtor which has an adverse effect on the smooth running of commercial transactions,

D. whereas both the substantive law and the procedural law which are applicable vary from one Member State to another, which is an additional obstacle to the enforcement of contractual payment conditions in a cross-border context and hence an obstacle to the proper working of the Internal Market,

E. whereas delays in making payments are in effect greater with cross-border transactions than with domestic transactions,

F. whereas the proper functioning of the internal market requires transparency of rules applicable to contracting parties, harmonization of differing national rules and legal practices, and comparable administrative, financial and enforceable cost, which if abused, may lead to unfair trading conditions,

G. whereas payment practice has, in the main, been a product of business culture which has been evolving due to economic factors and to the culture maintained by national and Community public authorities and public-law enterprises,

H. whereas about 50 per cent of all SME basic borrowing is used to fund commercial credit, and where payment is delayed or uncertain, prompt payers are subsidising bad payers since the cost of commercial credit is not included in the original price,

I. whereas there is an urgent need to set out legally binding rules which would have as an objective to determine a level playing field between SMEs and larger enterprises,

J. whereas the scope of an EU directive should be to ensure that, after the expiry of the credit period, both interest on late payments and damages payable in compensation for costs incurred by the creditor in the recovery of the debt due will be charged,

1. Approves the objectives set out in the Commission recommendation, the transparency called for to tighten up contractual payment terms, the right of creditors to appropriate compensation if the statutory period has been exceeded, and the need to simplify legal procedures for redress and settlement procedures;

2. Is, however, doubtful as to the appropriateness of a non-binding EU instrument to ensure reasonable payment periods, foster fair and open competition and confidence in the market, and help economic progress by promoting best business practice and increased trade activity;

3. Expresses its concern regarding the response of Member States to a Commission recommendation, which has so far been empty of content since most Member States seem to regard it as non-binding;

4. Is encouraged by recent research that shows a clear correlation between simplified but binding legislation and good payment practice; calls on the Commission, in the context of better law-making and administrative simplification, to consider transforming its recommendation into a proposal for a Council Directive to be submitted as soon as possible;

5. Recognizes that imposing by law the set payment periods is detrimental to commercial contractual freedom, yet improving confidence in the single market by setting clear standards, eliminating unfair payment practices by defining the underlying rules and creating a market free of credit obstacles while harmonizing the widely varying legislation in Member States require a framework of minimum legislation to improve business culture, ensuring good and fair practices;

6. Proposes therefore the following guidelines for a proposal for a Council Directive :

(a) statutory interest payments to creditors, which should be automatic and appropriate as a penalty and as a deterrent;

(b) statutory compensation for costs incurred in connection with the recovery of debts in accordance with tariffed fees to be determined by a suitable public authority;

(c) a minimum of harmonization of legal provisions relating to

(i) simple and effective extrajudicial procedures;

(ii) simple and effective court enforcement procedures for recovery of payments due and of related costs;

(d) concrete measures for training SMEs in credit management;

(e) deferment of paying VAT until invoices are settled;

(f) provision for appropriate credit information relating to accurate data on persistent late or non-payment of debts, on unwarranted infringement, on abuse of a dominant position, on fraud, etc.;

(g) provision for licensing of debt collectors which should fulfil certain requirements which provide financial guarantees while following harmonized standards concerning probity, financial solvency and high training standards;

(h) waivable provisions for a statutory period of payment;

7. Considers it imperative that public authorities and public-law enterprises assume responsibility for changing business culture in the field of payment and for setting a new standard in public procurement contracts; to this effect, requests the Commission and the Council to accept Parliament's amendments in its opinion of 29 February 1996 on the proposal for a European Parliament and Council Directive amending Directive 92/50/EEC relating to the coordination of procedures for the award of public service contracts, Directive 93/36/EEC coordinating procedures for the award of public supply contracts and Directive 93/37/EEC concerning the coordination of procedures for the award of public work contracts (COM(95)0107 - C4-0161/95 - 95/0079(COD)) ((OJ C 78, 18.3.1996, p. 18.));

8. Reminds the Commission of the provisions of Article 138b of the EC Treaty concerning the right of Parliament to request the Commission to submit the appropriate legislative proposal;

9. Instructs its President to forward this resolution to the Council, the Commission and the national parliaments of the Member States.