EUROPEAN COMMISSION Brussels, 2.5.2017 SWD(2017) 216 final Compliance Package COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT

Accompanying the document Proposal for a



REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

setting out the conditions and procedure by which the Commission may request undertakings and associations of undertakings to provide information in relation to the internal market and related areas

{COM(2017) 257 final}

{SWD(2017) 215 final}

{SWD(2017) 217 final}



Table of contents 1. Introduction 2. Problem definition 2.1.What is the problem? 2.2.Why is it a problem? 2.3.Who is affected, in what ways, and to what extent? 2.4.Problem drivers 2.5.How would the problems evolve? 3. Why should the Union act? 3.1.Legal basis 3.2.Necessity and added-value of Union action 4. What should be achieved? 4.1.Objectives 4.2.Consistency with other Union policies 5. What are the various options to achieve the objectives? 5.1.Baseline scenario: no Union policy change 5.2.Option 1: Exchange of best practices between Member States and with the Commission 5.3.Option 2: Lifting regulatory limitations to the sharing of firm-level information between the Member States and the Commission

5.4.Option 3: Introducing residual investigative powers through national level single market information tools 5.5.Option 4: Introducing an EU-level Single Market Information Tool (SMIT) 5.6.Option 5: A 'hybrid' approach combining Options 2 and 4 5.7.Discarded options 6. What are the impacts of the different policy options and who will be affected? 6.1.Impacts of Option 1 6.2.Impacts of Option 2 6.3.Impacts common to Options 3, 4 and 5 6.4.Additional impacts specific to Option 3 6.5.Additional impacts specific to Option 4 6.6.Additional impacts specific to Option 5 7. How do the options compare? 7.1.Comparison of the options 7.2.Preferred option 8. How would actual impacts be monitored and evaluated? Annex 1: Procedural information Annex 2: Stakeholder consultation A2.1. Results of the public consultations A2.2. Results of the targeted consultations A2.3. How the results of consultations were used

Annex 3: Who is affected by the initiative and how Annex 4: Analytical models used in preparing the impact assessment Annex 5: Examples and case studies supporting the problem definition A5.1. Examples of incomplete information in infringement proceedings before the CJEU A5.2. Examples from the State aid domain Annex 6: Overview of existing policy frameworks A6.1. Investigative powers of the European Commission A6.2. Investigative powers of EU bodies/agencies in the financial services sector A6.3. Examples of investigative powers of national authorities in Member States A6.4. Examples of information exchange tools between different authorities A6.5. Examples of investigative powers of third country authorities Annex 7: Discarded options A7.1. Reuse of Competition and Consumer Protection tools for coordination in Option 3 A7.2. Options not discussed in the impact assessment Annex 8: Cost-benefit estimation A8.1. Costs A8.2. Benefits A8.3. Comparison of costs and benefits A8.4. Sensitivity analysis Annex 9: Why should the EU act?

A9.1. The legal basis A9.2. Subsidiarity



List of abbreviations and glossary of terms Term/abbreviation Explanation BEREC Body of European Regulators for Electronic Communications bn Billion B2B Business-to-Business CEBS Committee of European Banking Supervisors CIS Community Innovation Survey CJEU Court of Justice of the European Union CMA Competition and Markets Authority COM The European Commission CPC Consumer Protection Cooperation (Regulation) DG Directorate-General DG GROW Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs DSM Digital Single Market ECtHR European Court of Human Rights EBA European Banking Authority ECN European Competition Network EEA European Economic Area EIOPA European Insurance and Occupational Pensions Authority ESMA European Securities and Markets Authority EUIPO European Union Intellectual Property Office FRIBS Framework Regulation Integrating Business Statistics IMI Internal Market Information system Infringement Breach of the EU acquis IPR Intellectual Property Right m Million MIT Market Investigation Tool used by the Commission in the State aid area MS Member State NCA National Competition Authorities NSA National Statistical Authorities RSB Regulatory Scrutiny Board SBS Structural Business Statistics Single Market Strategy Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, 'Upgrading the Single Market: more opportunities for people and business', COM(2015)550, 28.10.2015 SME Small and Medium-sized Enterprise(s) SMIT Single Market Information Tool SRB Single Resolution Board TEU Treaty on European Union TFEU Treaty on the Functioning of the European Union



1.Introduction While there has been considerable progress towards a more integrated single market in recent years, citizens and firms are frustrated that they still face obstacles to reaping its full benefits. In addition, they consider that these obstacles are not being addressed fast enough by the Commission, other Union institutions and the Member States. In the words of one stakeholder: 'The European Commission did not act against the Member State or the process took so long that our members had no other choice than to adapt to the situation'. The Single Market Strategy adopted in October 2015 identifies that these barriers could be addressed more effectively and efficiently if the Commission and the Member States had access to timely, comprehensive, accurate, and reliable information. For this reason, the Strategy proposed a Single Market Information Tool (SMIT) to collect quantitative and qualitative information directly from selected market players. 'It [the Commission] will propose a regulatory initiative allowing it to collect reliable information directly from selected market players, with a view to safeguarding and improving the functioning of the single market'. When the Commission or Member States are alerted of an incidence of malfunctioning in the single market, evidence is necessary in order to proceed, particularly evidence in respect of whether the underlying cause is a breach of Union rules. Furthermore, sound information on the severity of the breach is required, of its impact on individuals or firms, and on how widespread the practices that cause the breach are at the geographical, sector, and product/service level. Obtaining this information is challenging, particularly in cases with a cross-border dimension, for a number of reasons. Firstly, the required evidence is often detailed and sensitive firm-level information, which is not available publicly and cannot be purchased from third party data providers. Secondly, the required information is sometimes available to national authorities in only some Member States. Thirdly, the collected data is often not comparable across Member States. Given these challenges, the market participants concerned would be the only feasible information source. Unfortunately, in most cases they currently lack the incentive to share their confidential information; and in addition there is no mechanism in place to ensure the veracity of any data that would ultimately be shared. At present, Union and national mechanisms for information collection are not sufficient to acquire this information from market players. At the national level, a large majority of Member States have only sector-specific information collection powers, and these are generally ill-suited to request cross-border information or to share the information that is collected with the Commission or other Member States. At the Union level, the Commission has investigation powers only in the domain narrowly prescribed by competition law and trade defence policy. In these domains, the existing powers help the Commission to be more precise in its economic assessments and enable it to adopt swifter and solid facts-based decisions. Nevertheless, Union rules on State aid, anti-competitive agreements, abuse of dominant position, or mergers address only a subset of all the possible instances of potential malfunctioning of the single market; and information collected using these investigation powers cannot be used for purposes other than the application of the competition rules of the Treaty. This impact assessment analyses the need for intervention allowing the Commission, or the Commission and Member States, to collect information directly from selected market players in order to 'improve the Commission’s ability to monitor and enforce EU rules in priority areas', as well as 'help the Commission to propose improvements where evaluation shows that enforcement deficits are due to flaws in the relevant sectoral legislation'. 2.Problem definition The establishment of an internal market is one of the main objectives to be reached by the Union in cooperation with the Member States, as set out in Article 3(3) of the Treaty on European Union (TEU). This objective is articulated in more detail in Article 26 of the Treaty on the Functioning of the European Union (TFEU), which provides for the adoption of measures to both establish and ensure the functioning of the internal market. To that end, the internal market is underpinned by fundamental provisions of the TFEU on free movement of goods, services, persons, and capital; and non-discrimination on grounds of citizenship/origin. Member States' authorities are responsible for the implementation of single market legislation into national law and its correct enforcement in their respective territory. Additionally, the responsibility of the Commission, defined by the Article 17(1) TEU, is to ensure that the Treaties, as well as secondary rules adopted pursuant to them, are correctly applied to, inter alia, make the single market a reality. The Commission is often referred to as the 'guardian of the Treaties', and is empowered by the TEU to monitor in all Member States the application of Union law. The responsibility to enforce market participants' compliance with the Union legislation in the area of the internal market generally lies with Member States (except as regards Union rules on competition, which the Commission can enforce). In turn, the Commission can take legal action against Member States in the form of infringement proceedings under Article 258 TFEU. Those proceedings allow the Commission to ensure that Union law is correctly applied. In those proceedings, the Commission has the 'responsibility to place before the Court all the factual information needed' to enable the Court of Justice of the European Union (CJEU) to establish that an obligation has not been fulfilled by the Member State concerned. In addition, in cases where the evaluation shows that enforcement deficits are due to shortcomings of the relevant sectoral legislation, the Commission may propose improvements aiming at giving effect to the Treaty rules in the area of single market. However, as mentioned above, the Commission does not have investigative powers of its own in the area of the single market and is largely reliant on information provided by complainants, by public and private bodies and, particularly, by the Member State(s) concerned. At the same time, the CJEU has progressively become stricter with the Commission in relation to the volume of factual evidence that it must submit. What is the problem?

The main problem addressed by this impact assessment is the lack of reliable and accurate firm-level information for the Commission and Member States in situations when it is necessary to timely (i) identify and measure the impact of practices non-compliant with single market rules; (ii) prioritise enforcement of compliance with such rules; or (iii) in cases of enforcement deficits, use the information collected to prepare proposals for Union legislative acts or, as appropriate, alternative policy instruments . It is important to emphasise at the outset that this initiative does not aim at creating new enforcement powers for the Commission (e.g. procedures to pursue infringements against individual market participants). Rather, it complements existing enforcement procedures with additional fact-finding ability for a small but significant subset of instances where this is strictly necessary. Since 1996, the CJEU has, either partially or totally, dismissed the Commission's claims in at least 49 infringement cases stating that the Commission had not submitted sufficient factual evidence in support of all or part of its claims. This amounts to 16% of the 309 infringement cases lost by the Commission on substantive grounds during that period (of the total 1654 judgments on infringement cases issued by the CJEU in that period). Furthermore, in at least 17 of those cases the Commission could have obtained the missing information/data from private parties had it have investigative powers. When addressing obstacles to the functioning of the internal market - either via infringement proceedings or, in case of enforcement deficits, through legislative initiatives - the Commission is in a great majority of cases able to acquire the necessary information already. It is collected either from the Member States, who are under a duty to cooperate with the Commission as per Article 4(3) TEU, or via currently available tools. Although this information is not always extremely detailed, it is in most cases sufficient to clearly support the Commission's decision-making. Sometimes, however, the available information does not allow to: (1) confirm whether the situation constitutes a breach of Union rules, (2) assess how grave the impact of such breach is on the single market (prioritisation), and (3) how efficient a Commission action (regardless of whether in a form of an infringement procedure or actions to ensure the application of the Union law) would be in improving the situation. In such circumstances, fine-grained information would allow for more rapid and precise actions. The current regulatory framework as regards the Commission's powers to obtain information for addressing obstacles to the functioning of the internal market rules works efficiently for a great majority of cases. Challenges only arise in extraordinary situations where very detailed, comparable, up-to-date, and often confidential, firm-level data are necessary within a limited time frame. The remainder of this section, and this impact assessment in general, describe problems relating to the latter limited subset of cases. Why is it a problem? In order to acquire evidence needed for proving the existence of serious obstacles to the functioning of the internal market (including possible infringements of Union law) and calibrating the Commission's response to such obstacles, the Commission primarily relies on the Member States (except in the field of antitrust and mergers). However, in certain cases national authorities may not possess the required firm-level information or their national rules on information collection may prevent them from sharing it with the Commission or with other Member States (either at all or in a sufficiently timely/disaggregated fashion). To complement the information received from national authorities, the Commission relies on voluntary cooperation from interested parties. This may involve obtaining information from complainants or through voluntary public or targeted consultation methods. Such consultations, however, are not designed with proprietary or confidential information in mind. Accordingly, it is frequently difficult to ensure that the information collected is unbiased, reliable, complete, comparable or timely. In certain circumstances, the Commission and Member States cannot rely on official statistics, as there is a time lag in their production and they are often insufficiently detailed or disaggregated for enforcement and policy preparation purposes. These underlying problem drivers are presented in Fig. 2.1 and are discussed in Section 2.4. Fig. 2.1 Problem tree Following the Single Market Strategy, this initiative primarily focuses on the problems relating to the enforcement of Union internal market rules, particularly through legal actions (i.e. infringement proceedings against Member States). In case when such legal actions are not sufficient to tackle the single market obstacles at stake (particularly if such obstacles are novel, systematic and persistent), the information will be used to prepare proposals of legislative or non-legislative nature. Moreover, it should be emphasized that these actions are not easily separable as, for example, individual infringement cases can evolve into new Union legislation (see the case study on the geo-blocking initiative in the following section). Illustration of the problem This subsection presents examples illustrating why lack of information could, in particular circumstances, constitute an obstacle to the enforcement of single market rules. They include infringement proceedings at the judicial stage, infringement proceedings at the administrative stage and preparation of new single market rules where evaluation has shown that systematic enforcement deficits are due to gaps in Union legislation. These examples span across different policy domains. They are not meant to be exhaustive, but rather a small, yet representative, subset to illustrate that reliable, detailed and timely market information would have allowed for more effective and efficient enforcement in different areas.



Examples of incomplete information in the scope of infringement proceedings a) Examples of incomplete information before the CJEU As already mentioned, over the past 20 years the Commission has lost at least 17 infringement cases in front of the CJEU due to lack of sufficient factual evidence that could had been obtained from private parties. Moreover, the economic impact of these cases on the single market is significant. For instance, in one such case , the Commission argued that German legislation was discriminating against non-resident pension funds since these funds could not deduct from dividends and interest received the operating costs incurred which are directly linked to that income (e.g. banking expenses and analogous transaction costs; costs linked to disputes on dividends paid by a resident company to a non-resident pension fund; and expenses linked to human resources specifically tasked with the acquisition of shares from which dividends may be obtained). The CJEU considered that the evidence submitted by the Commission was insufficient and theoretical, amounting to mere presumptions, and dismissed the action. The Commission would have needed detailed and representative examples of operational costs to support its allegations – yet, such evidence could have only originated from pension funds. In another case , the CJEU dismissed the Commission's claim that Portuguese legislation resulted in higher taxation of non-resident financial institutions because of lack of credible evidence and further stated that 'the Commission could have furnished, inter alia, statistical data or information concerning the level of interest paid on bank loans and relating to the refinancing conditions in order to support the plausibility of its calculations'. Such missing information could have only come from (resident and non-resident) financial institutions. b) Examples of incomplete information in the framework of proceedings at an administrative stage Enforcement of public concessions rules in the context of large infrastructure projects: Extending concessions without opening a call for tender is allowed by Union public procurement rules if certain conditions are met. These conditions include compensating a concessionaire for lost revenues caused by a regulatory change or providing a concessionaire additional time to amortise its investment costs. Given the nature of the infrastructure that is subject to concessions (e.g. railways and ports), the monetary implications and the consequences for citizens of choosing the best and cheapest concessionaire are enormous (and were estimated at least at EUR 3 billion in one particular case). In order to determine whether an extension of a concession without opening a tender is justified, or more importantly, whether such a prolongation infringes on Union rules, detailed revenue and cost data are indispensable. Since the conditions that justify such an extension relate to the concessionaire not having been sufficiently remunerated for its investment and risk-taking, detailed data on investment and demand are required for such assessment. These data are mostly business secrets of private firms and the Commission cannot obtain them under the current legal framework. Buying these data from commercial data sources is not an option either as it is unavailable. Hence, in the past the Commission has had to rely on estimates. Enforcing public procurement rules in the utilities sector: If a given utility sector (water, energy, transport and postal services) in a Member State is subject to enough market pressure, entities and contracting authorities operating in that sector are exempted from the application of the Utilities Directive (Article 34 of the Directive 2014/25/EU). Firms have a clear incentive to be exempted, since this reduces their administrative burden and allows them to procure at their own discretion. Analysing whether the degree of market pressure is sufficient to justify an exemption requires micro-level information that is not publicly available, including business secrets, such as data on prices, quantities, and cost structure. Currently, the Commission can neither obtain such information from stakeholders other than the applicant, nor question the validity of the evidence presented by the applicant. The latter is particularly relevant because the Commission is at a clear informational disadvantage regarding the sector information compared to the applicant. Since the applicant has a clear incentive to be exempted, it could present the information in the most favourable light to being granted the exemption. Given the relevance of the water, energy, transport, and postal service, a precise and timely assessment is extremely important.

Examples of incomplete information where an infringement case evolves into a proposal for a legislative initiative In July 2015, following consumer complaints on discrimination of German and British buyers, the Commission asked France to investigate Euro Disney's online pricing practices. Following this infringement investigation, the Commission proposed the regulation addressing unjustified geo-blocking specifically addressing price discrimination based on the nationality or residence, including services that are delivered in the same location, such as entry tickets to leisure parks. The Council conclusions of 21 November 2016 call for evaluating four years after adopting the geo-blocking regulation whether it should be extended to the sale of copyright protected works in an intangible formError! Bookmark not defined.. These works are often licensed and distributed on a territorial (Member State) basis. Furthermore, producers of premium content often grant an exclusive license to a single distributor/broadcaster/service provider in each Member State . Whether reasons for such territorial restrictions are justified and whether expanding the scope of the geo-blocking regulation to the sale of copyright protected content would be desirable and improve consumer choice is not obvious. This will require an empirical quantitative assessment, for which CRA (2014) confirmed that the necessary data are not publicly available. In the past, the Commission has requested these data, but only a handful of anecdotes and aggregated statistics were delivered. A report by the European Parliament and the Council on addressing unjustified geo-blocking stated: '[…] evaluation of the extension to audio-visual services should be based on detailed price and cost data which only service providers possess. Therefore, these providers should cooperate in the evaluation in order to assess whether the inclusion of these services within the scope of this Regulation would lead to the evolution towards more efficient business models than the ones currently used.' A well-informed regulatory decision would be crucial as it could have a significant impact on existing business models, industry revenues and content creation. A marginal improvement in the precision of measuring a policy change impact might have enormous benefits when a change in revenues for a whole industry might be at stake: 1 % of copyright intensive industries revenue constitutes more than 9 billion euros. Who is affected, in what ways, and to what extent? Obstacles to the Single Market cannot be easily overcome when the Commission lacks data to prove what is causing them, how severe they are, and what the impact of potential solutions would be. In exceptional cases, when very detailed, comparable, up-to-date, often confidential, firm-level information is required within a short time frame, such data can only be obtained directly from firms. Not being able to obtain this information and hence, not being able to overcome the single market obstacles, affects firms operating in the single market, citizens (in their capacity as consumers, employees and shareholders) and public authorities, including the Commission. Lack of evidence related to market functioning may compromise the Commission's response, whether in relation to its precision (through insufficiently robust evidence to back up economically important infringement cases or policy interventions), its efficiency (enforcement of cross-border cases hampered and/or slowed down due to incomplete evidence), or its effectiveness (insufficient grounds to prioritise infringements or assess potential policy interventions). The following stakeholders are affected by these issues: Citizens face uncertainty about the extent of protection of their rights due to sub-optimal cross-border enforcement of single market rules. Lower trust in the single market can dissuade them from working, travelling, and shopping (including online) in other Member States. Consumers ultimately suffer from the limited competition resulting from sub-optimal cross-border enforcement: they pay higher prices and have fewer choices. Firms operating in the Union may face legal uncertainty and barriers when expanding cross-border, thus limiting their possibilities for optimal allocation of resources and achieving economies of scale. In turn, this negatively affects their international competitiveness and job creation. Institutions of the Union and national public authorities may not be able to acquire necessary data to support infringement procedures or to propose amendments to the existing rules. This may cause less optimal calibration of enforcement actions or policy responses, delays, as well as monetary and staffing costs in inefficient attempts to acquire firm-level information through indirect and potentially less reliable sources Problem drivers This section singles out the principal reasons why the current information-gathering framework might not be sufficient to obtain detailed and timely firm-level information in specific instances. National mechanisms for information collection are sector specific and generally ill-suited to request cross-border information and/or share information collected When monitoring and enforcing Union rules, the Commission relies primarily on information submitted by the Member States concerned. Pursuant to Article 4(3) TEU, Member States are under the obligation to facilitate the Commission in carrying out its tasks, particularly its role as guardian of the Treaties. In practice, this means that Member States should provide the Commission, upon request, with information and documents when the Commission investigates a possible infringement of Union law. As mandated by Union law, competent authorities in Member States have horizontal (generic) supervisory powers in competition policy and consumer protection, as well as several sector-specific powers, all of which are relevant for the single market area. Some of these powers allow them to collect detailed information directly from market participants. However, those powers are generally limited to either a specific sector (e.g. energy, transport, financial services) or to one section of a value chain (e.g. consumer protection). In principle, several existing policy frameworks – on the basis of Union sectoral legislation – contain mechanisms for limited data and information sharing between national authorities and the Commission respectively. However, unless specifically provided for under Union legislation, Member State authorities cannot share firm-level data and information with the Commission, for reasons related to professional secrecy obligations, the confidential nature of such information, or data protection. In addition, it can be argued that currently, outside of those areas regulated by Union sectoral legislation, there is no clear legal basis that would require national regulatory authorities to provide the Commission with firm-level data or information. Only one local authority replying to the public consultation, said that it would be possible both to ask companies on behalf of the Commission and then to subsequently share with the Commission the information collected. Moreover, none of the Member States except the UK possess horizontal (generic) information powers adequate for single market enforcement (the notable exception being the UK Competition and Markets Authority)31. As a result, Member States are generally not able to ask companies for information in the context of a single market infringement case or for preparation of a Union single market policy; or they may not be able to get data for evaluation/benchmarking purposes outside an investigation procedure (e.g. by asking competitors). In the public consultation, only three out of ten responding authorities reported having powers to ask companies directly for information (a UK, French and a regional Spanish administration). Three authorities explicitly stated that they have no such powers, and two said that the absence of these powers caused problems in enforcement or in legislative activity. The UK Competition and Markets Authority (CMA) combines the powers of initial and in-depth investigations and it uses criminal and civil means to gather information and conduct cases related to competition and consumer protection problems. These powers allow it to examine why particular markets may be malfunctioning, including reasons beyond competition policy. The CMA can seek firm-level information on a range of matters, including the pricing and quality of goods and services supplied in the market under investigation. It can impose sanctions for non-reply. It can also make recommendations to sectoral regulators (e.g. Ofcom and Ofgem) or to the UK Government when new legislation might be required. However, the firm-level information collected cannot be shared with the Commission or other Member States. Extensive market investigation powers are available to over 300 federal-level US authorities as well as to Australian authorities, including subpoenas, obtaining confidential firm data and imposing sanctions for non-compliance (Annex 6). Another aspect is the lack of specific information in all Member States, and the incomparability of such information due to the different definitions used.

In 2014 the Commission wanted to assess the importance of copyright-intensive sectors to the EU economy. Necessary detailed data on employment were not available in Eurostat. The French, German and UK governments were the only Member States collecting this type of information at a national level. However, the data was not comparable due to different national definitions used. As a result, the report heavily relied on assumptions, when measuring employment in the copyright intensive sector. This in turn weakened its value for policy making in the field.

Even if firm-level information is available in one Member State, it is by definition limited in its geographic scope. This prevents the use of Member State information tools – where available – to address enforcement cases with a cross-border dimension (i.e. where relevant market data relates to cross-border value chains or where there are indicators that similar single market failures may exist in several Member States). At the same time, such cases would precisely be those that are likely to be a priority for single market enforcement. Firms lack incentives to voluntarily reveal confidential information To gather necessary information, the Commission relies on consumer/firm complaints, as well as various consultation methods and tools (both open and targeted), such as questionnaires, surveys, meetings, hearings and workshops. The most common consultation methods include open public consultations, seminars, reports from stakeholders and studies. These information resources always rely on voluntary participation by requested stakeholders. Complainants may have a vested interest in submitting information, particularly in situations in which they are disadvantaged. Yet, confronting this information with (possibly contradictory) information originating from other parties may not be an easy task. Firms replying to the public consultation for this initiative stated that they do not/would not provide sensitive information as it is costly to extract, it might leak and be used by competitors or public authorities, or it might simply be published. In addition to complaints, the Commission routinely approaches market participants to request firm-level information (on a voluntary basis). However, experience shows that stakeholders are often reluctant to disclose data with private value, especially when it could be used against their interest in enforcement actions or to introduce legislation that could diminish their market power (e.g. through exposure to foreign competition). This is also due to the fact that firms often fear that the confidentiality of the information provided might not be properly respected. This problem concerns also national authorities. For instance, one Member State reported in the public consultation problems with obtaining data from firms located in other Member States who simply did not reply to its requests. Selected examples of past information requests addressed to private parties demonstrate their lack of incentive to provide this information on a voluntary basis: In the context of a recent enforcement case of the Utilities Directive in the transport sector, the Commission requested the applicant to provide key privately-owned raw data concerning its revenues and costs. The applicant refused to cooperate diligently and provided the required information long after the deadline, thus limiting the Commission's ability to use this data to support its decision. In 2016, the Commission had a reasonable suspicion of a frequent absence of published tenders for purchasing Computer Tomography scanners in several Member States. In order to support an infringement case for failure to comply with EU public procurement rules, the Commission needed firm-level information on contracts and sales. Due to obvious inconsistencies, existing sources of information were considered unreliable. The Commission asked a prominent market player for this information who, despite having it readily available, replied that it was 'unwilling to cooperate in the investigation until the Commission makes a formal request'.

For the reasons outlined above, stakeholders are also often reluctant to provide sensitive information in response to public consultations. That being said, public consultations do give access to empirical information, indicate expected impacts, and they identify non-evident policy alternatives when taking a policy decision. They are particularly valuable as they involve a wide range of stakeholders in the regulatory processes and improve transparency. However, standard consultations might not be sufficient when the necessary data are sensitive or confidential. Several examples of past public consultations illustrate the lack of stakeholders' incentive to provide the requested information, which may present a problem in evidence collection: A 2014 consultation on copyright generated 9581 replies, which took 30 officials and 5 month to process. Almost no data on prices, costs, and profits was submitted – even though all were of utmost importance. The 2009 consultation on Accounting Directives resulted in 309 replies, but several questions on cost were answered by only 2 companies. This information was necessary to assess the burden of reporting obligations to see whether it needed to be simplified. The recent public consultation on due diligence and supply chain integrity for intellectual property asked right holders to provide, inter alia, information related to their relation with suppliers, identification of intellectual property infringements, and auditing practices. Notwithstanding the encouragements to industry to engage in the consultation, the Commission received only 11 replies from companies and business associations. Many told the Commission they did not want to provide the information – even if it was in their interest to do so – because it was too confidential.

External studies produced for the Commission and Member State authorities often suffer from the same problem: study authors cannot oblige stakeholders to provide the needed firm-level information. In fact, it is common practice that external contractors request the Commission for a recommendation letter to present to interviewees to gain their confidence – signifying even greater lack of trust than in front of the Commission. Difficulties in acquiring information and data from firms were outlined in the 2012 RAND report on measuring intellectual property rights infringements in the single market. In this case, the point-blank refusal of firms to provide sensitive information (e.g. forecasts and sales data) was due to the fact that, if leaked, their competitors or new entrants into the market could potentially make strategic use of the information revealed. Only in two instances firms were willing to share data with RAND upon the execution of a nondisclosure agreement. The 2016 study on the distribution in the organic food chain commissioned by the Commission aimed at providing deeper understanding of the dynamics of the organic market. Yet it could not collect the necessary supply chain data due to the reluctance of firms to give up sensitive commercial data.

Occasionally, contractors performing external studies succeed in acquiring the necessary data. However, this is often under the condition of signing a confidentiality agreement with stakeholders which obliges them not to share any firm-level information with the Commission. This situation is problematic for several reasons. The Commission has access only to aggregated data, which makes targeted single market enforcement difficult. More importantly, the Commission has no ability to verify the underlying data submitted by stakeholders and cannot, therefore, judge the correctness of the calculations performed by external contractors. It is difficult to verify correctness, completeness and representativeness of information provided voluntarily by firms Standard consultations typically rely on stakeholders' willingness to participate and provide the requested information. Accordingly, these contributions are assessed by the Commission in the full knowledge that they cannot necessarily be extrapolated to the whole stakeholder community in question (unless all members of that community reply, e.g. all Member States). This self-imposed limitation is mostly due to the fact that the stakeholders who do respond are self-selecting and may therefore over-represent those individuals and special interests who are both the best organised and who hold particularly strong views on the subject. For example, the 2014 public consultation on the review of the Union's copyright rules attracted considerable interest from stakeholders, with 9 581 replies, the vast majority of which resulted from organised actions, which included 'model responses' and guides for replying (which were circulated over the internet). Similarly, the 2016 public consultation on the role of publishers in the copyright value chain and on the 'panorama exception' produced 6 203 replies, 2791 out of which were similar responses sent by an organised campaigner. The analysis of the responses to the 2013 consultation on trade secrets also pointed to a strong mobilisation by special interests (e.g. some groups provided multiple replies via affiliated companies, while a political party provided model responses for citizens). The accuracy of targeted consultations and external voluntary submissions from market participants cannot be fully relied on either as certain stakeholders may have used the consultation in question to present the facts in a particular way, or not to provide certain information at all. For instance, the 2010 consultation on country-by-country reporting requirements targeting large multinational companies received 43 answers from preparers of accounts. However, only three of them replied to the question on the estimated cost related to the introduction of such reporting requirements. Moreover, the information provided was aggregated at a corporate level (ranging from $10M to over $100M), thus not allowing for properly detailed analysis. When selection bias is an issue, the Commission sometimes conducts representative Union-wide surveys, for instance through Eurobarometer. This method, however, is much more expensive than a public consultation. A Union-wide representative citizen survey costs around EUR 15 000 per question and is even more expensive when firms are involved. However, even Eurobarometer surveys are not designed for acquiring detailed or confidential firm-level information. Sufficiently detailed and timely information from the market is otherwise not available

The Commission currently has investigation powers only in the domain narrowly prescribed by the Union competition rules. There, the existing powers help the Commission to be more precise in its economic assessment and enable it to adopt swifter and solid facts-based decisions, reinforcing the basis for infringement actions). However, these powers are limited by their legal basis to narrowly prescribed areas and do not allow for collecting and re-using the information gathered for other single market related policy purposes. A similar reasoning applies to data gathering under the Regulation on consumer protection cooperation (the 'CPC Regulation'). Under this Regulation, consumer protection authorities have the power to request information from firms, provided this information concerns a suspected intra-Union infringement of Union consumer legislation that is listed in the Annex of the Regulation. The CPC Regulation establishes a cooperation system between competent authorities, which has been designed for the purpose of cross-border enforcement of Union consumer laws but remains limited to this Regulation and other consumer-relevant legislation. The CPC Regulation thus covers the needs of enforcement of Union consumer law in a cross-border context, and is not appropriate to support the enforcement of neither business-to-business relations nor all other single market areas. Last but not least, the Commission also collects a large amount of commercial information available through official statistics. However, such statistics are often produced with a time delay and at a level of aggregation that does not necessarily match the specific needs of firm-level policy making. For example, the Structural Business Statistics (SBS) provides the most sector disaggregated economic data in Eurostat (offering many economic variables, including auxiliary dimensions not available in national accounts) but no information about individual firms . Moreover, preliminary data are published about one year and final data about 20 months after the end of the reference year, thus often being not suitable to inform a timely policy response. In addition, some surveys are conducted infrequently: for example, the Eurostat Labour Cost Survey and Structure of Earnings Survey are conducted only every four years , and the Community Innovation Survey (CIS) is conducted every two years . How would the problems evolve? Existing Union information tools may be leaving gaps in the single market enforcement. National tools are generally not designed for cross-border problems. As a result, the Commission and Member States will continue to be confronted by a lack of access to reliable and sufficiently complete firm-level information where such information is really required for identifying and addressing single market malfunctions. The problems identified in this impact assessment would, therefore, remain largely unresolved. Further data gaps might also arise in the future (the 'known unknowns', as it were), as new economic phenomena appear within the single market (e.g. the collaborative economy or the – up to now – unregulated banking products). The scope of existing information tools may be expanded over time to remedy data gaps where and when they arise. However, any such change involves a long legislative process. The baseline scenario is described in more detail in Section 5.1. 3.Why should the Union act? Legal basis Article 114 TFEU provides for the adoption of measures for the approximation of the provisions laid down by law, regulation or administrative action in the Member States, provided that they are necessary for the smooth functioning of the single market. The use of Article 114 TFEU would therefore aim at preventing the emergence of obstacles to the functioning of the single market and should be an appropriate legal basis for a Union action entrusting Member State authorities with powers to collect information. However, should the policy intervention require an entrustment of the Commission with direct powers to collect information from firms, Article 114 TFEU would need to be supplemented by Article 337 TFEU. The latter entitles the Commission to collect any information required for the performance of the tasks entrusted to it, within the limits and under the conditions set out by the Union legislator. Since Article 114 TFEU acts as a default legal basis within the single market area, the use of other Articles of the TFEU as additional specific legal basis may be appropriate in order to cover single market fields that rely on specific legal basis within the TFEU for legislative action: e.g. Article 43(2) TFEU (agricultural goods), Articles 91 TFEU and 100 (transport), Article 192 (environment) or Article 194(2) TFEU (energy). For more details on the legal basis, see Annex 9. Necessity and added-value of Union action An important responsibility of the Commission under Article 17(1) TEU is to ensure that the Treaties and Union legislative acts adopted pursuant to them are correctly applied. The Commission is empowered, as the 'guardian of the Treaties', to oversee the application of Union law in the Member States. In order to correctly perform this function, Commission's access to relevant, reliable, accurate and timely information is essential – including, where necessary, access to firm-level information. The CJEU has progressively been stricter with the Commission in relation to the sufficient factual evidence that it must submit in order to prove 'to the requisite legal standard' the elements of the allegations made in infringement proceedings. Union action is needed to ensure that the Commission will have access to firm-level information necessary to improve its ability to monitor and enforce Union single market rules. This objective cannot be sufficiently achieved by Member States alone, due to legal barriers to sharing firm-level information with the Commission and uncoordinated national approaches in this area (see Section 2.4.1). In addition, possible national responses would be limited in their geographical scope, while the obstacles to the functioning of the single market are often cross-border. Therefore, the objectives envisaged can be better achieved, by reason of its scale and effect, at Union level. Such Union action would fulfil the necessity test in this regard and would enhance the ability of the Commission to ensure the respect of Union law, in particular with regard to infringement proceedings. The necessity test would also be met regarding the collection of firm-level information for cases where evaluation shows that enforcement deficits are due to flaws in the relevant legislation. As a matter of principle (cf. Article 17(2) TEU), Union legislative acts may only be adopted on the basis of a Commission proposal (except where the Treaties provide otherwise). As demonstrated in the examples in the previous section, there may be instances where the Commission will need to have access to firm-level information to calibrate a regulatory solution. Union action is also needed for this purpose, for the same reasons (e.g. Member States action would not be sufficient) expressed in the previous paragraph. It must be noted that since the aim of this tool is better enforcement of EU law, there is no sharp distinction between infringements proceedings and the use of legislative acts to address serious obstacles to the internal market in case of enforcement deficits, in particular during the period in which the Commission undertakes preparatory work. When the Commission is at the stage of collecting information to assess whether there are obstacles to the functioning of the internal market it may conclude that launching infringement proceedings (which is a faculty, not an obligation of the Commission) would not adequately solve the problem and therefore there is a need to propose a legislative change. In terms of added-value, Union action would ensure that the Commission has access to relevant, reliable, accurate, comparable and timely firm-level information in those (exceptional) instances where access to such information is necessary and cannot be obtained otherwise (e.g. in situations where national authorities cannot have access to the relevant data; where they do not wish to cooperate with the Commission; or where firms do not voluntary agree to share data with the Commission). This would lead to better informed enforcement actions or potentially to policy initiatives (in case of enforcement deficits) by the Commission. Furthermore, when the Commission obtained firm-level data in an infringement proceeding, the concerned Member States could also access this data and improve their application of Union law. For more details on the subsidiarity requirements, see Annex 9. 4.What should be achieved? Objectives The general objective of the initiative is ensuring a better functioning single market through more effective application of single market rules and principles. This particularly relates to improving the Commission’s ability to monitor and enforce Union rules in areas of key importance. In addition, the tool may also help the Commission to propose improvements where evaluation shows that enforcement deficits are due to shortcomings of the relevant sectoral legislation. This general objective would be achieved by providing the Commission with easier access to firm-level data where needed to detect and combat obstacles to the functioning of the single market, including misapplication of Union law. This would additionally assist Member States in better applying single market rules at national level.

The specific objectives of the initiative are the following (Fig. 4.1): facilitating access to comparable cross-border data; facilitating access to confidential/privileged firm-level information; ensuring that collected information is correct, complete and unbiased; and ensuring that the information is sufficiently detailed, disaggregated and timely. It should be emphasized that these objectives do not concern the majority of situations, as usually either: (1) market information is not necessary for proving the existence of particular obstacles to the functioning of the single market or for calibrating the Commission's response to such obstacles; (2) market information is necessary only at an aggregate level, e.g. as provided by Eurostat; (3) existing sources of information are sufficiently timely and detailed. Consistency with other Union policies The initiative is consistent with other Union policies. First and foremost, the initiative will contribute to better enforcement of the Treaty principles on fundamental freedoms (Articles 28, 45, 49, 56, 63 TFEU) as well as single market secondary legislation, in particular in instances which require complex economic analysis and need to be substantiated with economic data. Ultimately, the initiative will contribute to achieving the Union's aim of establishing and ensuring the functioning of the single market and realising its full potential. Pending a final decision by the Union Legislator on the scope of the initiative, it would also allow for better enforcement of single market rules with regard to, for example, agricultural products and in the transport and energy sectors, thus also contributing to the establishment of a common agriculture policy (Article 38 TFEU), a common transport policy (Article 90 TFEU), as well as Union policy on energy (Article 194 TFEU). This initiative complements existing sector-specific tools in the area of competition and consumer protection law. Although addressing issues in a different domain, this initiative in many dimensions closely corresponds to the Market Investigation Tool (MIT) available to the Commission in the State aid area. Namely, the objectives of the tools are similar, they involve the same stakeholders (the Commission, Member States, and market participants), and would be used for collecting similar type of information under similar extraordinary conditions. Therefore, the anticipated impact of the use of the tool could be compared. 5.What are the various options to achieve the objectives? Baseline scenario: no Union policy change In the baseline scenario, the Commission would continue to rely on current information sources for firm-level information necessary for the purpose of ensuring the correct application of single market rules. These sources would be voluntary submissions through complaints, open public consultation, targeted surveys, reports by stakeholders, commissioned studies, commercial databases, voluntary requests for information, and ad hoc submissions as well as Member States submissions. The Commission could enhance the confidentiality provisions of its consultations to try increasing firms' willingness to provide information. More frequent use of external polling organisations via a Eurobarometer facility could lead to more representative responses, but would substantially burden the European budget since firm surveys are particularly costly (compared to consumer surveys). However, these external surveys could not gather information on complex and confidential issues, like firms' pricing strategies. In policy areas where the Commission or Member States have the ability to request the necessary information from firms (e.g. in competition, consumer protection law, regulated network industries), the use of existing tools for addressing the single market enforcement remains imperfect. For example, the published results of a sector investigation under Union competition law, like the recent e-commerce one, can be used to support a single market reform outside the narrow competition policy domain; but using individual replies to such investigations for purposes other than enforcement of competition law will remain legally impossible. Furthermore, existing national information collection powers could be potentially spontaneously extended and used in selected sectorial contexts. However, sharing information between authorities and the Commission would remain an issue. At the same time, the role of the Commission as guardian of the Treaties may be weakened, in so far as infringement proceedings in complex cases would be more difficult, while the importance of preliminary rulings by the CJEU would increase. The disadvantage of relying on preliminary rulings for complex cases in the single market area is that the CJEU will, in the vast majority of cases, have to take a decision based on exchange of legal arguments with lower levels of economic analysis compared to the analysis that the Commission could undertake in the preparatory phase of infringement proceedings. The Inter-institutional Agreement on Better Law-Making commits the co-legislator to consider including monitoring and evaluation provisions in all new Union acts. It is likely, therefore, that sectorial legislation will include provisions on monitoring and that more firm-level data will gradually become available. However, monitoring indicators cannot in all cases address very specific problems that may arise in the course of application of legislation, nor can they adequately foresee future market developments. Furthermore, monitoring arrangements cannot be designed to cover all issues beyond the scope of existing regulations. Therefore, this would only partially alleviate the identified problems. Option 1: Exchange of best practices between Member States and with the Commission The Commission would recommend to Member States to exchange best practices on collecting specific firm-level information. The experience of dedicated authorities at Union and national level (e.g. National Competition Authorities, Consumer Protection Cooperation Network, Agency for Cooperation of Energy Regulators, Financial Supervisory Authorities like the EBA, the European Insurance and Occupational Pensions Authority, or the European Securities Markets Authority) would be leveraged to develop guidance and recommendations for collecting firm-level information. Best practices to minimise the administrative burden, protect confidential information, treat cross-border cases, and share information among Member States and the Commission would be devised. The Member States would then be encouraged to implement these best practices. Option 2: Lifting regulatory limitations to the sharing of firm-level information between the Member States and the Commission This option consist in Union legislation (a Directive) lifting national rules (e.g. professional secrecy rules) that prevent Member States' authorities from sharing with the Commission and other Member States firm-level information they already possess or could access on the basis of Union or national law. This option does not foresee granting specific investigation powers to Members States. Nor does it foresee a specific framework for the Commission's requests to Member States. Instead, general rules on cooperation under Article 4(3) TEU would apply. Launch of requests. Member States would be responsible for ensuring compliance with the requests for information. Confidentiality and sharing of information. The Commission and the Member States should ensure that the information submitted in reply to a request for information is treated in a manner that ensures its confidentiality, following best practices from the competition policy field and taking due account of the legitimate interests of the replying firms in the protection of their business secrets. Therefore, they would be subject to appropriate professional secrecy obligations in respect of such information. This should not, however, prevent the Commission from using information necessary in the context of infringement proceedings. The Commission could only share information received from one Member State with other Member States if the information-providing Member States agree. However, information should be shared with all Member States concerned in a given investigation. Third party access to confidential information would be governed by the rules on access to documents held by Union institutions. These rules foresee exceptions to disclosure in cases where disclosure would undermine the commercial interests of a person.

Use of information. Disaggregated firm-level data shared by a Member State with the Commission (and with other Member States) could only be used by the Commission (and the other Member States) to enforce single market rules relating to the specific subject matter invoked by the Commission when asking the concerned Member States to share the information. However, aggregated and anonymised information could be further used for other purposes. Option 3: Introducing residual investigative powers through national level single market information tools This option would build upon Option 2. In addition, Member States would be required by Union legislation to entrust an authority or several authorities with the power to request quantitative and qualitative firm-level information directly from market participants operating within their territories, where such information is needed for proving the existence of serious obstacles to the functioning of the internal market, including possible infringements of Union law in that area, or for calibrating the Commission's response to such obstacles – whether through infringement proceedings or, in case of enforcement deficits, legislative initiatives. This power would be of residual nature, supplementing sector-specific investigative powers already entrusted to Member States by specific Union law. This power would also be without prejudice to the existing investigative powers of national authorities pursuant to national law. This option would not, as such, decide which national authority should be entrusted with the residual investigative powers. Member States would have the freedom to decide which authority or authorities should have that power. Commission's role. As with Option 2, the Commission would be able to request firm-level information from the Member State concerned under Article 4(3) TEU and would need to motivate its request to show that the requested information is necessary for taking timely and informed decisions in relation to possible obstacles to the functioning of the internal market. This option would introduce a coordination role for the Commission in the event that the Commission needs firm-level information from more than one Member State for the same issues, in order to ensure that the national information requests address the same issues and that the addressees of the requests are comparable. Addressees of requests for information. Information requests would be addressed to undertakings and associations of undertakings (trade organisations and business associations) operating in the Union. Large firms with market power would be the primary addressees, small and medium-sized enterprises (SMEs) could occasionally be concerned, while micro-enterprises would be exempted. Information requests could be addressed to a single or a range of market participants. The Commission and the Member States would take into account the cost for responding parties and would request information only from targeted market participants. The Commission and the Member States may also request information to be provided in specified formats with common definitions. Such requests would, where possible, be made through electronic means. Launch of requests. This would be as in Option 2. The addressees of information requests would have the means of judicial redress foreseen at the national level to oppose the national requests for information. The Commission could assist Member States by issuing guidance on best practices to launch requests for information, including setting up appropriate sanctions for intentionally or negligently supplying incorrect or misleading information in response to an information request. Requests from the Commission to the Member States could be enforced through infringement proceedings for failure to comply with Article 4(3) TEU. Confidentiality and sharing of information. As in Option 2. Use of information. As in Option 2. Option 4: Introducing an EU-level Single Market Information Tool (SMIT) Under this option, Union legislation would empower the Commission to use a Single Market Information Tool (SMIT) for requesting quantitative and qualitative firm-level information directly from market participants. SMIT would be used where such information is needed for proving the existence of serious obstacles to the functioning of the internal market (incl. possible infringements of Union law in that area) or for calibrating the Commission's response to such obstacles – whether through infringement proceedings or legislative initiatives in case of enforcement deficits. Conditions for the use of SMIT by the Commission. SMIT would not be used routinely, but rather as an exceptional, 'last resort' tool following a case-by-case assessment by the Commission. In order to issue an information request, the Commission would first need to formally adopt a Decision stating its intention to use SMIT and showing that the following main conditions are fulfilled: 1.There is enough information available suggesting the existence of a serious problem with the application of Union law undermining the attainment of important Union policy objectives in relation to the aim of establishing and ensuring the functioning of the internal market, most notably in terms of economic or social impact; 2.The information to be requested is required for the performance of the tasks entrusted to the Commission by the Treaties in the area of the internal market, notably proving the existence of serious obstacles to the functioning of the internal market or calibrating the Commission's response to such obstacles; and 3.The information is not available elsewhere, meaning it may not be obtained or could not be obtained timely enough through other means. In addition, the Decision should detail the criteria for selecting the addresses of the requests for information. These requests are to be addressed only to market participants that could be expected to provide sufficiently relevant information and for whom the information would be readily available (i.e. acquiring such information does not require extended research or a major effort to retrieve). Commission's compliance with the above-described conditions would be subject to judicial review before the CJEU, which could annul a decision failing to show how the conditions are met. The judicial review will therefore guarantee the last resort character of the tool. Addressees of requests for information. As in Option 3 regarding the type of market participants and the possibility to use specified formats and common definitions. The addressee of a request must be clearly informed about the reasons for such request and will have the possibility to object to the request. Selective and limited nature of the requests for information. Information requests under Option 4 must be limited to the information which is indeed necessary for the Commission to carry out its tasks, as described in the prior Decision referred to above (cf. conditions). Moreover, the requests should be addressed only to a selected and limited number of market participants: such number will be low (likely below 5) in the context of an infringement procedure, while it could be higher, but still limited (likely below 50) in case of proposing improvements where evaluation shows that enforcement deficits are due to flaws in the relevant legislation, as benchmarking needs may require sending of requests to additional addressees. Member States' role. The Commission would inform Member States of the requests for information sent to market participants established in their territory. Forms of requests for information and compliance. Information requests could take either a form of a simple information request (without an obligation to reply) or a formal Commission Decision (compelling the addressee to provide the information). The Commission would be vested with the responsibility of ensuring compliance with those requests. As in the State aid field, the Commission would be empowered (but not obliged) to impose sanctions on the addressee who intentionally or through gross negligence supplies incorrect or misleading information. In case of an information request by Decision, the Commission could in addition impose sanctions for late or missing replies. Those sanctions would be pecuniary (fines or periodic penalty payments) and their amount modelled on the established rules in the State aid field, which offer sufficient incentives for parties concerned to comply. The Commission would not impose sanctions automatically, but would undertake a case-by-case assessment, with due regard to proportionality and appropriateness, especially in case of SMEs, and due process. The Commission could waive any periodic penalty payment already imposed when the addressee finally provides a reply.The addressees of a Commission Decision imposing sanctions could appeal to the CJEU, in accordance with Article 263 TFEU. The CJEU could cancel, increase or reduce any pecuniary sanction imposed by the Commission.

Confidentiality and sharing of information. Confidentiality and professional secrecy principles as in Options 2 and 3. The Commission shall forward the answers received to the Member State(s) concerned by the request where they are relevant for a formal infringement procedure pursuant to Article 258 TFEU against that Member State(s). Should a responding firm consider that its reply contains information that should remain confidential vis-à-vis that Member State, it should substantiate its claims and provide additionally a non-confidential reply that can be shared with the concerned Member State(s). Such non-confidential version should follow the same format as the confidential version, replacing deleted passages by summaries thereof. Use of the collected information. The Commission would be allowed to use the information collected only for the purpose for which it was required. Disaggregated firm-level information could be used by the Commission to prove the existence of obstacles to the functioning of the internal market (incl. possible infringements of Union law) and for informing infringements proceedings. When this information is used for informing legislative initiatives, any information included in documents supporting such initiatives must be in aggregated form or otherwise anonymised such that individual respondents cannot be identified. Where a Member State has access to firm-level information in the context of infringement proceedings, it could use such information only for the purpose of enforcing Union rules. Option 5: A 'hybrid' approach combining Options 2 and 4 Option 5 would combine lifting regulatory limitations to the sharing of firm-level information between the Member States and the Commission (Option 2) and introduction of SMIT (Option 4). See above for the details of both options. As described under Option 4, SMIT would be used only if the requested firm-level information is not available anywhere else and could not be obtained in a timely fashion through other means. In Option 5, this would include information that Member States already possess or could already access on the basis of Union or national law. Option 5 would entail a coordination mechanism. It would ensure that national investigation powers are primarily used for the targeted enforcement of Union law at national level while SMIT would be available to the Commission for collecting the information required in instances with a specific cross-border dimension: e.g. enforcing Union law through a cohort of systemic infringement proceedings or calibrating the Commission's response to serious obstacles to the functioning of the internal market through legislative initiatives in case of enforcement deficits. Discarded options Two options contemplated in the inception impact assessment (Option 6 – enhancing the coverage of European statistics – and Option 7 – introducing regular reporting obligations via the Accounting Directive) are discarded upfront. These options would only partly address the specific objectives of this initiative at the cost of imposing significant administrative burden. Although both options could deliver additional representative firm-level information (at least in an aggregate form), they are not suited for obtaining specific confidential information. Thus, protection of sensitive information, which is of key importance to the stakeholders, would be compromised. In addition, Option 6 could not ensure collecting descriptive information. Furthermore, given that statistics are often based on a sample of firms, it could not be guaranteed that firms of interest in a given case would be covered. As the time lag in both options is more than one year, they would not meet the timeliness criterion. In addition, information obligations could not be swiftly changed as this requires long legislative process. These options would in addition be disproportionate – covering the whole population of enterprises on a regular basis would significantly increase the administrative burden (respectively by EUR 68m and EUR 1.8bn annually). All firms responding to public consultations except one were against the creation of regular reporting obligations and all respondents cautioned against increases in administrative burden. In the view of those considerations, the detailed analysis of these discarded options is discontinued. More analysis of the discarded options can be found in Annex 7. 6.What are the impacts of the different policy options and who will be affected? Impacts of Option 1 The exchange of best practices between Member States in relation to the collection of cross-sector firm-level information to enforce single market rules would face a substantial hurdle. According to the public consultation, only one Member State already has a dedicated authority (UK CMA) empowered to collect such kind of information and therefore having the necessary experience. Therefore, all other Member States would need to first grant similar powers to their authorities in order to benefit from the UK's specific experience. This would be a lengthy process. Also, given the voluntary nature of this exchange, it is unclear how many Member States would choose to grant these information powers to one of their authorities. National authorities in sectors such as competition, consumer protection, financial services or network industries are already organised in Union-wide networks, where information exchange takes place among them (but not always with the Commission). The scope of these networks is limited to a single sector or to specific policy areas (e.g. competition), thus not all relevant requests could be made. Even if all the above restrictions were voluntarily eliminated, the fragmented nature of authorities entails a lengthy and costly coordination. This would include, for example, finding relevant authorities, negotiation agreement to launch information requests, creating common questionnaires with standard definitions and avoiding double counting. The consequence would be a substantial lag in obtaining results. It must be noted that having such powers national authorities would likely use them more often than for a few cases envisaged in this proposal thus significantly increasing the burden on companies which was the key concern for firms in the public consultation. Summing up, Option 1 could meet the objective in the long run assuming cooperation of all Member States, agreeing to create new investigative national institutions. Once they have been created, coordination problems and legal limitations to data sharing with the Commission and between Member States would need to be solved to tackle cross-border cases. The annual Union-wide cost of this option could range from EUR 0 (if no Member State choses to participate) up to EUR 0.59m for firms and EUR 0.44m for national authorities (in case all Member States will follow the recommendation).The lower bound for the potential benefits of this option is estimated at EUR 50m, but the benefits are unlikely to materialise in the short to medium run, as explained above (see also Annex 8). Impacts of Option 2 Firms participating in the public consultation preferred using existing information already gathered by different authorities rather than being asked again for the same information (80% of answers). They were against any duplicate requirements (being asked for the same information by different authorities). There were also calls for more exchange of information between Member States. This option could give the Commission de iure access to firm-level information gathered by national authorities. However, the effectiveness of the option largely depends on Member States' capacity to cooperate with the Commission, which is limited for the following reasons. First, authorities will often not possess or be able to obtain the kind of firm-level, disaggregated data that would be needed to address single market malfunctioning cases (e.g. firms’ pricing strategy or cost structure). Second, authorities often collect data over particular time periods (e.g. annual income taxes) and store archives only for a specific time, as a consequence such data might not be available to the Commission in a timely fashion or at all. Third, Member States' incentives to share information with the Commission might be eroded, given that firms provided the information being unaware that it would later be shared with the Commission for a different purpose. If firms were granted the right to oppose to their data being shared with the Commission, this would render Option 2 rather ineffective; and, if unlimited Commission's access to national databases is secured, this would give raise to proportionality concerns. Fourth, Member States could be hesitant or unwilling to provide sensitive information in certain instances (e.g. when it could be used for infringement proceedings concerning them) and could potentially be inclined to challenge the need for providing the information. This could lead to submission delays, incomplete information or no submission at all. There would be two additional obstacles to implementing this option: comparability and proportionality. Data from different authorities may not be comparable across Member States, for example due to different definitions applied when collecting the information at domestic level. This could lead to the need to recalculate the data according to common definitions, which might require additional firm input. There could be additional proportionality concerns when sharing certain types of information (e.g. tax returns), although these could possibly be solved by an exemption. In summary, although this option would increase access to certain types of firm-level data, its effectiveness is likely to be limited and it seems to be too intrusive into national competencies, thus disproportionate to the objectives at hand. The annual cost of this option is calculated under an assumption that between 0% and 50% of Commission’s information needs could be met by the national authorities. For firms the cost is then between EUR 0 (in case they are not asked) and EUR 0.29m. Expenses of the Member States range from EUR 0.006m to EUR 0.27m and of the Commission - from EUR 0.01m to EUR 0.15. The total cost is between EUR 0.02m and EUR 0.72m. The lower bound for the potential benefits of this option is estimated at EUR 50m. The benefits are moderately likely to materialise due to uncertainty whether information could be provided by national authorities (see also Annex 8). Impacts common to Options 3, 4 and 5 The impacts of Options 3 to 5 on market participants, public authorities, and citizens go largely in a similar direction. However, there are also differences in the effectiveness and timeliness of the proposed tools and the resulting administrative burden for the Commission and national authorities.

In the public consultation, two fifths of the firms and authorities and three quarters of the citizens and consumer organisations agreed that authorities at the Union or national level should have the right to ask for confidential firm-level information when it is crucial for solving breaches of citizens’ or firms’ rights under Union law. One-fifth of the firms, two authorities and a third of the citizens stated that this right should also be granted to prevent future breaches. One seventh of the firms, a third of the authorities and one fifth of the citizens replied that such requests should never be possible. National authorities from two Member States (out of ten who replied) expressed their preference for the Commission to coordinate information requests; two opted for direct power to ask firms in any Member State without involvement of the Commission. Market participants: Those market participants having to comply with the obligation to provide information under Options 3 to 5 would incur costs for extracting and compiling the requested information. These costs are estimated between EUR 1,200 and EUR 4,400 per responding large firm (EUR 300 - EUR 1,000 for SMEs), increasing by EUR 4,000 for the cost of legal advice. On average, five firms would be asked to provide information in a case of infringement proceedings. In the event enforcement deficits were demonstrated for which a change in the applicable legislation is needed, a higher number of firms (up to 50) would be addressed (see also Annex 8). Additional administrative burden may arise if market participants are requested to provide information in a specified format. However, the benefits of having data in a more standard format and avoiding methodological shortfalls could outweigh these costs. As requested by participants to the public consultation, the Commission would take several measures to minimise this burden, including issuing information requests only in particularly important cases and only requesting information that the firms could easily provide. Electronic data submission would reduce the response burden, increase efficiency in acquisition and processing, and improve timeliness. In addition to the aforementioned administrative burden, replying firms would be differently impacted depending on the role they play in a particular single market malfunctioning instance under examination. On the one hand, the impact would be negative for market participants benefiting from the status quo (i.e. 'favoured' by the obstacles to the internal market that need to be addressed, whether through infringement proceedings or legislative initiatives). On the other hand, firms or consumers whose rights are potentially breached would benefit from better informed enforcement of Union rules and enhanced access to the single market. This should have positive effect on firms' competitiveness, facilitate cross-border expansion and increase availability of goods and services to customers and firms alike. Overall, market participants would benefit from a better functioning single market thanks to more targeted enforcement actions by the Commission and the Member States. They would also benefit from better designed Union rules and a more fitting regulatory environment. In addition, more robust evidence could prevent the creation of unnecessary or imprecise rules that could potentially distort the market. Market participants would additionally benefit from enhanced legal certainty, compared to a situation in which the Member States or the Commission would ask for voluntary submissions, and would be protected from adverse consequences resulting from providing data to public authorities: i.e. without options 2 to 5 replying firms may face certain legal constraints, including contractual disclosure rules that prevent them from disclosing information to authorities, which could result in retaliation measures from their contractors/business partners. Including SMEs in the scope of Options 3 to 5 would contribute to ensuring the effectiveness of the initiative, although they are not considered the primary addressees. When proving the existence of serious obstacles to the functioning of the single market and calibrating a response to such obstacles, the Commission would use firm-level information to assess how widespread the behaviour/practice leading to the single market malfunctioning seem to be (across time and firms) and what the economic/social damage of the practice is. The behaviour of individual large firms can have greater impact than the one of individual SME, given the scale of their operations. Furthermore, large firms tend to have more cross-border operations than SMEs. However, depending on the country or industry, SMEs may be very relevant to analyse the extent of a single market malfunctioning. For example, in some Member States/sectors medium-sized companies are the largest market players. Hence, including SMEs in the scope of Option 3 to 5 would help to ensure that a Commission's response to a single market obstacle will not be detrimental to them and would facilitate addressing obstacles impeding SMEs to benefit fully from the single market. As pointed out by a small craft organisation in the public consultation, requests targeting SMEs should take their capabilities into account and minimise the burden through measures such as a concise and precise questionnaire. This will be ensured for all firms regardless their size, since they will only be asked the strictly necessary information. Exclusion of micro-enterprises from information requests, on the other hand, does not limit the effectiveness of the initiative since their information could be approximated, if necessary, by that of the smaller SMEs. Public authorities: The Commission would benefit greatly from being able to access robust, timely and sufficiently detailed information directly from market participants. This would facilitate more targeted and timely enforcement actions through infringement proceedings and a better informed evaluation and preparation of single market policies. The impact of Options 3 to 5 on the national authorities would be equally positive, as enhanced access to information should result in better-informed single market enforcement at Member State level. This, in turn, could limit the instances of formal infringement proceedings against Member States. Being able to use information collection powers could allow the Commission to reduce the number and hence the cost of external evidence-gathering studies or to commission better targeted studies. The estimated saving on external research on a yearly basis ranges between EUR 0.7m and EUR 1.6m. These options would require that the Commission and the national authorities coordinate their actions, handling of information requests, and the collected information analyses. The associated additional administrative burden on authorities of gathering and analysing a reply from a single firm is estimated at between EUR 1,700 and EUR 6,10095. Options 3 and 5 entail an additional coordination cost and time, as discussed in the following sections. Citizens/social impact: Having robust information on single market malfunctioning would allow the Commission and national authorities to ensure a higher degree of compliance with single market laws, as well as better designed Union policies, thus contributing to a more frictionless functioning of the single market. This would enhance consumer trust in the single market, resulting in wider participation in and use of the single market possibilities such as cross-border working, shopping or access to online content. Moreover, benefits such as e.g. better use of public resources (i.e. lower taxes or better public services) thanks to well-functioning public procurement or financial stability due to better oversight of financial institutions (i.e. safe deposits and investments) bring additional benefits to citizens. Additional impacts specific to Option 3 Under Option 3, collecting information may in some situations require complex and lengthy coordination efforts between Member States and the Commission. Such efforts would be particularly high in instances with a strong cross-border dimension involving many stakeholders from several Member States. These coordination efforts would significantly increase the administrative burden placed on the Commission. Furthermore, ensuring a timely access to the information may be impeded. Administrative burden would also be placed on national administrations who would issue and process information requests. Member States replying to public consultation were advocating need for a strong cooperation in any data collection activities and some suggested that they are best placed to handle it. Until 2014, Member States were obliged by the Procurement Directives to collect and submit to the Commission annual statistical reports on awarded public contracts. Decades of experience have shown that the quality and soundness of these reports varied widely ; problems like missing or contradictory data, non comparability across Member States despite providing them with commonly agreed templates, and substantial delays of up to three years or even non submission of reports. Hence, in spite of hiring external consultants to clean the data, its inherent quality was so low that no meaningful Union wide analysis was possible. As a consequence, since 2014 a centralised web portal run by the Commissions became the principal source of data on European public procurement .



Under Option 3, Member States would be responsible for ensuring compliance with information requests. Therefore, potential sanctions for missing, late, incomplete or misleading replies would not necessarily be harmonised across the Member States. This could lead to several problems. First, a potential lack of sanctions for non-compliant firms in some Member States may reduce the effectiveness of the initiative as market participants may have no incentive to provide the requested information. Second, it would be difficult to ensure that the data is provided on time and that the information is correct and reliable. Third, this could lead to unfair treatment of market participants, particularly in cross-border cases where firms are placed in different Member States and are, therefore, under different regimes of potential sanctions. Similar to Option 2, an additional obstacle limiting the effectiveness of Option 3 is the potential lack of cooperation of Member States, who may not be willing to request and share information in sensitive cases. Indeed negotiating authorities’ agreement to issue information requests on their territory especially in cross border cases is considered one of major drawback of this option. A further element reducing the efficiency of Option 3 (and of Option 2) is the likely dispersion of national authorities with regard to investigative powers, increasing the difficulty of the coordination efforts. In Option 3, the entrustment of the new residual information collection powers to an appropriate authority (or a ministry) would be left to Member States. The most likely scenario is that information requests would be handled by the relevant authority/ministry, but as authorities/ministries would differ depending on the case and the Member State, any cross-country coordination may be extremely complicated. One could argue that Member States' voluntary use of existing authorities and their coordination networks could overcome this coordination difficulty. Such use, however, proves problematic. For instance, if Member States were to empower their national competition or national consumer protection authorities to gather information for the Commission in the single market area generally, such empowerment is likely to endanger the coherence of both the competition and consumer protection systems and distract those dedicated authorities from their core responsibilities, with potential negative implications on the quality of their services (e.g. competition authorities may be involved in long, complex and resource-heavy investigations).For these reasons, the reuse of existing coordination mechanisms and procedures from other policy domains does not appear to be a viable alternative and remains unlikely to happen in practice. Furthermore, the voluntary creation by Member States of new dedicated national authorities/bodies with the specific task of using those residual powers does not appear as a likely outcome as it would add considerably to the burden while the new authorities would remain largely idle due to a low number of requests per year. Moreover, the creation of those authorities/bodies, by themselves, would not solve the coordination problem. Another potential issue is that the use of national-level investigative powers could not be limited by a Union legislation (as it is the case in Option 4). Therefore, firms might be addressed more frequently, which would significantly increase their administrative burden (an issue of key importance to firms replying to public consultation). The estimated annual Union-wide cost of this option for firms ranges between EUR 0.36m and EUR 0.59m. The projected cost to Member States ranges from EUR 0.35m to EUR 0.52m and to the Commission – from EUR 0.07m to EUR 0.26m. Total cost ranges between EUR 0.78m and EUR 1.37m. The expected benefits of the option range from EUR 50m to EUR 6bn for enforcement cases and around EUR 9bn and more in cases when firm-level information collected is used for informing legislative initiatives, with a high likelihood that they will materialize, subject to limitation described above (see Annex 8). Additional impacts specific to Option 4 Option 4 would facilitate the enforcement of single market rules, whether through infringement proceedings or, in case of enforcement deficits, through proposals of legislative initiatives. This option would: ensure full geographical coverage of the issue under investigation (including the whole Union territory, where necessary in view of the situation at stake); facilitate efficient collection of information in situations with a cross-border dimension (i.e. where information from market participants placed in more than one Member State would be necessary), avoiding complex and lengthy coordination efforts with and among Member States; circumvent methodological problems that may otherwise be created by uncoordinated action from national authorities (e.g. using different definitions or merging the information with a risk of double counting); allow for a more timely access by the Commission to the required information. Cost-benefit ratio for Option 4 Benefits: The equivalent investigation powers in the State aid domain have since 2013 allowed the Commission to collect indispensable firm-level information in two large impact cases, resulting in a recovery of unpaid taxes to the tune of nearly EUR 50 million . Only in the public procurement case introduced in Section 2.2.1 , the potential savings on a one concessions case could exceed EUR 3 billion. Evaluating the extension of the geo-blocking regulation to copyrighted content more precisely could have great implications, since 1% revenue in copyright intensive industries amounts to EUR 9 billion. Costs: The yearly cost of firm-level data collection and analysis for 5 SMIT requests is estimated between EUR 0.5 million and EUR 1 million. Ratio: The benefits largely outweigh the costs.

The effectiveness of Option 4 will be particularly strong for those instances where information collected using SMIT will be used as necessary evidence for supporting Commission infringement proceedings or informing legislative initiatives in case of enforcement deficits. However, such effectiveness should be qualified considering that SMIT will be an exceptional tool subject to a rather demanding test: in other words, SMIT will not be the only tool to collect data for infringement proceedings as Member States will remain the first channel source for such data collection; it will also be used as a 'last resort' tool to support the assessment of impacts of selected important initiatives. In the exceptional circumstances in which the Commission could use SMIT powers, Option 4 would place an administrative burden on the Commission when issuing and processing information requests. Compared to Option 3, SMIT would hardly impose any administrative burden on Member States, since it would consist only of (negligible) cost of confirming that they cannot make the requested information available to the Commission. SMIT would, nevertheless, allow Member States, in the context of infringement procedures, to have access to information necessary for backing up economically significant enforcement cases. Thus, it would guarantee the role of the Member States, alongside the Commission, in securing that single market rules are correctly applied. Overall, Option 4 is likely to result in a more efficient process and less cumulative administrative burden for the Commission and Member States. In order to address some concerns of firms as regards the confidentiality of the information and its purported use, individual replies to requests for information would not be forwarded to Member States, unless in the context of formal infringement procedures. Yet, in those cases, respondents will have the possibility to submit an additional non-confidential version to the Commission to be forwarded to the national authorities. In addition, the information will be used only for the purpose for which it was collected. Preparation of an additional non-confidential answer is, however, connected with an additional cost as reported by one business association. The existence of sanctions for intentionally or negligently providing misleading information would ensure more truthful and reliable replies, thus improving the overall effectiveness of the initiative and clearly improving the status quo. Firms in the public consultation opted for a voluntary-only regime without sanctions, while supporting Member States acknowledge the need for proportionate sanctions. The sanctions proposed in Option 4 do not intended to correct any underlying firm behaviour relating to the practices under examination or to punish firms for creating cross-border obstacles to the functioning of the internal market. Instead, the proposed sanctions would only be issued for the failure to provide the relevant information at its disposal. Such sanctions would not apply automatically, but only after a case-by-case assessment accounting for relevant circumstances and paying particular attention to proportionality (particularly for SMEs). Finally, addressees of a Commission decision imposing sanctions could appeal to the Court to annul such decision or to lower the amount of the fine. The sanctions in option 4 are modelled after the competition law domain, where they have acted largely as a deterrent. In that domain, despite the large majority of information requests being issued only as simple requests