Opinion of the Committee of the Regions on the 'Green Paper on Commerce` (97/C 244/05)

THE COMMITTEE OF THE REGIONS,

having regard to the EC Commission's Green Paper on Commerce (COM(96) 530 final);

having regard to the decision taken by the EC Commission on 4 December 1996, under the first paragraph of Article 198 c of the Treaty establishing the European Community, to consult the Committee of the Regions on the matter;

having regard to its decision of 8 March 1996 instructing Commission 1 for Regional Development, Economic Development, Local and Regional Finances to draw up the relevant opinion;

having regard to the draft opinion (CdR 107/97 rev.) adopted by Commission 1 on 18 April 1997 (rapporteur: Mr Kaltenbach),

unanimously adopted the following opinion at its 18th plenary session on 11 and 12 June 1997 (meeting of 12 June).

1. Introduction

1.1. Commerce is a key sector of the economy and directly affects the daily lives of 370 million consumers. It is particularly sensitive to changes in social, economic and legal conditions and is wholly dependent upon customer behaviour. For these reasons alone it is of interest to the local and regional authorities.

1.2. On the eve of the 21st century, commerce - a diversified and complex sector - is facing major challenges, such as the problems of employment and social cohesion; it also has to cope with the radical social changes triggered by the development of new information technologies.

Commerce is also a key factor in land-use planning in peripheral areas, sensitive rural areas and areas surrounding urban conurbations.

The COR notes that the green paper does not address the service sector specifically. It therefore urges the Commission to embark on an overview at some juncture.

It should be pointed out that the commercial sector directly involves many activities generated by commerce, such as the work of middlemen and commercial agents. The interests of these players will have to be considered before any decision is taken concerning activities having a bearing on commerce.

1.3. Commerce clearly has to develop in an optimal competitive environment and make full use of the opportunities presented by the single market. The success of the single market itself is closely bound up with the establishment of an internal market in distribution.

1.4. In view of the above considerations the COR believes that it is necessary - against the background of a competitive environment requiring further consolidation - to maintain the balance between the different forms of commerce, whilst ensuring that the requirements of land-use planning and social cohesion are not sacrificed on the altar of commercial activity.

2. Observations

2.1. Exploiting the opportunities presented by the single market

2.1.1. The Commission green paper sets out guidelines for ensuring that the debate on commerce takes place against a background of fair competition, in accordance with national legislation which does not jeopardize such competition, so as to promote flexibility and competitiveness in the commercial sector.

2.1.2. The COR notes in particular that, over and above the existing disparities between the Member States, mergers between distributors are becoming wide-spread. The COR highlights the risk of suppliers, in particular those operating in specialized areas of commerce, becoming dependent upon large distributors.

2.1.3. The COR is pleased to note that independent traders, particularly small traders, are responding to this phenomenon by setting up organized networks thereby creating 'independent organized commerce`.

2.1.4. Although the green paper questions whether independent organized commerce is compatible with competition rules, the COR points out that the formation of independent distribution networks is one of the few solutions open to small retailers to enable them to meet competition from large distributors.

2.1.5. Consequently, a number of current trading practices, such as joint marketing, the publication of national promotional catalogues and, in particular, the setting of common prices, are regarded as acceptable when carried out by the large distributors, but deemed to be incompatible with the laws governing price fixing when organized independent traders are involved.

2.1.6. A difference in legal status therefore leads to a different application of competition law; the COR therefore takes the view that this particular case merits an in-depth investigation in order to ensure that a balance is maintained between the various forms of commerce, which is a highly desirable goal.

In this context the green paper simply raises the question of how small traders can cooperate with each other in order to remain competitive in the single market; it does not put forward any specific proposals.

2.1.7. The COR notes the green paper's suggestions for simplifying the conditions in which commercial enterprises operate, particularly the administrative and legislative environments. The various EU laws relating to consumer information should indeed be simplified and should, above all, be more in tune with the concerns of the consumer. It will not be possible to maintain commercial competitiveness and flexibility if commerce is excessively restricted by regulations. What would be most beneficial to commerce is market information made available locally and own-initiative measures, rather than centralized regulations.

2.1.8. The COR endorses the need to take account of new technology in the context of trade fostered by the information society, given the prospects which new technology opens up with regard to cross frontier markets. The new technologies constitute both an opportunity and a challenge which need to be taken up without delay.

2.1.9. The COR approves the Commission proposals for improving trade statistics compiled for public administrations responsible for the commercial sector and for private operators who need to be informed of the state of the market. However, the COR wishes to warn of the danger attendant upon any over-simplification of statistical information which removes data essential for compiling regional level intra-Community trade statistics.

2.1.10. The COR draws attention to the belief that the single market should become a genuine internal market - with a common external frontier and totally open internal frontiers - which would provide a real springboard for the establishment of an open world market.

2.1.11. The COR however believes that the removal of barriers to external trade must go hand-in-hand with improved harmonization in the field of indirect taxation. Free competition must not be disrupted by unilateral tax reductions.

2.2. Traders need to be given appropriate training

2.2.1. The COR highlights the importance of providing training for traders, in particular small traders, to prepare them for:

- the introduction of the single currency, for which they will serve as day-to-day ambassadors to the public,

- the introduction of the new technologies into routine trading activities.

2.2.2. The COR notes with interest the references made to the various EU programmes which could promote such measures, e.g. Leonardo da Vinci, Commerce 2000 and the multiannual programme to assist SMEs.

2.2.3. A specific training programme should however be targeted at staff in commercial enterprises, in particular SMEs, on the subject of the single currency and its specific technical implications for accounting and financial management. Such training should pave the way for the switch to the single currency and enable the operation to be carried out under conditions which are more effective for the economy as a whole. This is a task which should, as far as possible, be carried out at a regional level.

The COR shares the Commission's view that the introduction of the common currency will be of decisive importance to the distributive trade. In this context more will certainly need to be done than merely organizing information campaigns. It is undoubtedly true that the teething problems over the introduction of the new notes and coins will primarily affect retail business. For reasons of customer relations and with a view to ensuring that its customers are satisfied, it is therefore in commerce's own interest to provide as much help to its customers as possible when making the arrangements for the switch-over from national currencies to the euro.

In this context, the Commission will have to make an appraisal of the possible cost to commercial enterprises of the system of dual pricing, bearing in mind the benefits which may accrue in terms of legal security for consumers.

2.2.4. The abovementioned specific training programme could also alert SMEs in the commercial sector to the new possibilities opened up by the information and communications' technologies; these possibilities give all trading enterprises, in particular enterprises situated in border areas, an additional opportunity to benefit from the single market.

2.2.5. Commercial SMEs, in particular those situated in peripheral or isolated areas, sometimes rely too heavily on their local markets. These enterprises do not, as a matter of course, contact information points such as the 'Euro Info Centres` and are even less likely to take part in EU programmes such as Commerce 2000 or Leonardo da Vinci.

2.2.6. The COR therefore urges that the abovementioned specific training programme be systematically targeted at micro businesses and small commercial enterprises.

2.2.7. Local sources of information, such as local chambers of commerce or industry or equivalent bodies, and associations or groups representing small traders could be involved in the proposed programme in order to increase the scope for contacting the parties concerned.

2.2.8. The COR approves the EC Commission proposals on technical training and assistance required to develop the distributive sector in the countries of central and eastern Europe. The proposed accession of those countries to the EU makes it even more vitally important to bring their commercial sector into line; Phare and Tacis are general programmes which do not necessarily have sufficient capacity to meet this challenge, which is primarily cultural and economic in origin.

2.3. Preserving social cohesion through commercial activity

2.3.1. Although commerce has created a much higher percentage of new jobs than the economy as a whole, considerable disparities remain between the Member States as regards the scale of the increase. The COR wonders why the job-creation pattern varies from Member State to Member State; the areas of job-creating potential need to be pinpointed more accurately.

2.3.2. The COR approves the Commission's appraisal of the economic and social importance of the commercial sector, its key role in determining life styles and ensuring that other activities in the areas involved - in particular rural areas - remain an attractive proposition.

2.3.3. The COR supports the EC Commission's proposal that seminars for exchanging experience and information on good practice in this field be held in the regions. These seminars will be organized by the regional and local authorities with the aid of the Committee of the Regions.

2.3.4. Information on practical experience should be widely disseminated so as to enable those involved in commerce to exploit such experience wherever it is useful.

2.3.5. The COR agrees that efforts must be made to strike a balance in the commercial sector by (a) ensuring fair competition between traders and (b) taking account of the commercial dimension in land-use planning.

2.3.6. In rural areas, commercial activity suffers particularly from a low customer base and higher transport costs. Although reducing differentials between prices charged by shops in rural areas and those charged by large shops will remain a key objective, the possibilities opened up by new technologies and the advantages of independent organized commerce should make it possible to increase the competitiveness of small trading outlets in rural areas. The role which small traders play in guaranteeing local services should also be strengthened.

2.3.7. Commercial activity also provides vital support for other activities in rural areas, in peripheral and maritime regions and in coastal and island areas. Infrastructure in these regions needs to be strengthened both in respect of production and distribution.

2.3.8. The COR welcomes the territorial development initiatives - for which the commercial sector is eligible - implemented under EU regional policy in areas qualifying for Structural Fund aid.

2.3.9. The COR believes that the provision of aid, in particular under Objective 5b of the Structural Funds and the Leader initiative, to ensure that the last shop in a village remains open is a vital part of keeping rural communities alive; the next Commerce 2000 programme should take full account of the problems of rural communities and COR members should be involved in drawing up the programme.

2.3.10. Commercial activity in urban areas can make a very effective contribution to economic revival in areas plagued by crime and unemployment. Job creation in those areas should be particularly encouraged with a view to revitalizing community life and restoring a feeling of security.

2.3.11. The COR therefore welcomes the fact that the new Objective 2 programmes geared to the redevelopment of industrial areas in 1997-1999 pay special attention to retail trade. This area is targeted under the policy on urban renewal and the redevelopment of economically deprived areas. These measures are all the more beneficial in that, as well as creating jobs, they also help restore the social fabric which has been seriously undermined.

2.3.12. Funding for new modernization projects for SMEs must be guaranteed. The COR should be kept informed of the situation of the Structural Funds in the immediate future and the short and medium-terms.

2.3.13. The COR takes the view that the preservation of certain life styles, particularly in rural areas, is a vital element in the construction of a balanced society; if this balance is to be maintained, an in-depth study will have to be carried out to determine what assistance would be appropriate.

3. Conclusions

3.1. Commerce is a private sector activity which has traditionally generated the resources necessary to survive and develop without external assistance. It is an area where the principle of subsidiarity must be maintained, backed up by liberal conditions, in order to enable it to develop properly.

3.2. Commerce is, however, dependent on the levels of employment and the maintenance of sustained employment. Commerce requires an adequate customer base to ensure that it can go on operating profitably. Its success is determined by whether households can pay their way, which in turn depends upon bringing down unemployment, a return of the 'feel good` factor, the level of production costs and the concrete benefits derived from reducing the cost of training and recruiting young people; it is important in this context to promote the activities of commercial agents.

3.3. Commerce must however form part of a competitive system, with the key attributes of complementarity, effective targeting of markets and high quality products and services.

3.4. State intervention must be confined to certain structural aspects of business management and seek to bring about fair conditions of competition. One example of an area for state intervention is the situation where independent traders demand the right to set common prices on the same basis as chainstores. The introduction of the single currency will, in the COR's view, certainly help to improve conditions in this sector.

3.5. It would, in the COR's view, be advisable for the EU authorities to get down to drawing up a code of good conduct designed to ensure balanced participation by all enterprises in the implementation of economic and monetary union.

Brussels, 12 June 1997.

The Chairman of the Committee of the Regions

Pasqual MARAGALL i MIRA