ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(78)137
Vol.1978/0047

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(78)137 final
Brussels,4April1978
COMMUNICATION FROMTHECOMMISSION TOTHEPARLIAMENT /S
COMPLEMENT TOTHEADDRESS BYMRDAVIGNON,
MEMBEROFTHECOMMISSION ,TOPARLIAMENT ,,
GIVENON16FEBRUARY1978,ONTHEOCCASION
OFPARLIAMENT 'SEXAMINATION OFTHEPROPOSAL
FORARESOLUTION ONQUESTIONS RELATING TO
SMALLANDMEDIUM-SIZED ENTERPRISES INTHE
1
tCOMMUNITY
/«t.-,
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JP*'•
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C0M(78)137final

TwntoixjcTioir
Parliament'sreportontheproblems faoingsmall •andmedium-HBised
enterprises intheCommunity (Boo.518/77)isoutstanding quality,
bothinrespeotofitsoontentandofthemethodadopted *
Accordingly ,theCommission fullyendorsesthemainlinesofthe
resulting Resolution *TheCommission'sonlyreservation oonoernsthe
wayinwhichconoerted discussion withtherepresentatives of*
smallandmedium-sized enterprises shouldbeorganized *
Thismemorandum summarizes theCommission 'smainobservations onthe
Resolution *Itbeginsbyoutliningtheobjectives andtheprinoiples
vhiohtheCommission intendstofollowinthisfieldandthencomments
onthemainpointsraisedintheResolution *
I*OBJECTIVES AT7DPRINCIPLES '
1*OBJECTIVES
Therearesmallandmedium-sized enterprises (SMEs)inallsectorsof
industry ,oommeroe andservioes *Itisestimated thatoutside
agriculture andGovernment servioeabouttwo-thirds oftheworking
population workinthesefirms*TheSMEsaretherefore "typical"firms
andinnowayexceptions to"thegeneralrule*
ItistheSMEs–thosealreadyoperating orthosebeingsetup–which
givethatflexibility whichisessential toaneoonoaio systemifit
istobeabletomeetaswellaspossibletheneedsofoursociety,
whicharevaried,oomplexandconstantly changing *
Speoifio measurestohelptheSMEawillnevergettotherootofthe
problemstheSMEshavetocontendwithifthegeneralframework does
notenoourage theestablishment andexpansion ofthesefirms*

TheCommission *sfirst objeotiva istherefore toensure that the
eoonomio ,legal ,taxandsooial framework enables existing firms to
develop andadapt constantly tochanges andallows oftheestablishment
andgrowth ofnewfirms , ,
+ +
Because oftheir limited siee alarge number ofSMEs have
speoial problems preventing thea from playing effectively their proper
role inthe economio system *
TheCommissions second fundamental objective will therefore betohelp
theSMEs toovercome these problems bythemost appropriate means .
2.BASIC PRINCIPLES
Inthepursuit ofthese twofundamental objectives ,the Contmiss ion's
measures will beguided bythefollowing basio principles i
(i)Int_egrationof_the_SMEs andthe^arti^sanat ^injal.l -the_j)oli >oipe£
TheSMEs andtheartiBanororaft sector areinfluenced byavery wide
range ofpolioies andspecific programmes .Each Community policy and
programme liable toaffeot the SMEs ortheartisan sector must
therefore beestablished andexamined with dueregard totheSMEs *
special features andneeds soastoensure that they arenotharmed ,
whether directly orindirectly ,ormerely because theimplications of
planned measures have notbeen properly thought out*
(ii)Adoptai ors_of amultifaoet ajrproach
TheSMEs arevery diverse innature andhave special problems owing to
their limited eiee *

Some ofthese problems arecommon toallthe SMEis ,forexample the
"burden ofadministrative formalities andprocedures ,andsooial
security costs *
Other problems arise foronly certain categories ,forexample finance
mayrepresent aproblem foranewfirm growing rapidly butnotfora
stable firm oradeclining firm ;assistance inexport marketing isof
interest toonly asmall number ofthese firms *
TheCommission therefore proposes totake theinitiative inanumber of
fields inawayensuring that itsaotion oovers thegreatest possible
number oftheproblems with which theSMEs have tooontend *
Themeasures would beadapted anddifferentiated toensure that
individual firms canbenefit from speoifio measures aooording totheir
real and current needs *
(iii)Thecomplementarity of__nati,Q meas^ea_ax^_C£mmu^j^_meaaure!a
Most SMEs operate within relatively narrow geographical limits ,i.e.
within local orregional boundaries *Aminority ofthese firms operates
atnational ,oreven international level *'Agreat deal ofwork has
already been done atlocal ,regional andnational level ,either by
semi-publio agenoies orbyprivate bodies tohelp theSMEs tooveroome
their particular problems *
Community aotion ,wherever possible ,will therefore take theform of
complementary measures ,designed ,tostrengthen orcoordinate measures
taken atlevels nearer the SMEs *
Moreover ,Bpeoifio measures adopted bytheCommission ,as,forexample ,
inthefields offinanoing andexports ,will ,beimplemented ,wherever
possible ,through existing national and/orCommunity bodies ,whether
private orsemi-publio *

-4-
(iv)TheComni^s^ioajMlll ,sndeavoar to_koe]>it£actionjtc ,thestrict
neoøesary mimmum
TheSMEshaveoftencomplained .–andrightly BO–thatthefrequency
ofStateintervention ,thecomplexity oftheregulations andthe
resulting paper-work constitute a"burdentooheavyforthemto
shoulder -
M
Theaxistenoe ofanadditional levelabovethelocal,regional and
national levelscouldwellincrease innumberandrenderevenmore
complexthe.interventions andregulations .
TheCommission willtherefore doeverything itcantokeepitsaction
downtoaminimumandwillendeavour tosimplifyasfaraspossiblethe
presentation oftextsandtheresulting formalities .
II.OBSERVATIONS ONTHEMAINPOINTS RAISEDIffTHERESOLUTION
1.DEFINITIONS
Thedefinition ofanSMSvarieswidelyintheCommunity ,byoourrtry,
i
byindustry ,bypolicy,andbyspecific programme ,aswasshowndearly
intheCommission's"Dsfinitions "doouaent (Doo.413/lIl/76),published
in1976.
Thewiderangeoforiteria canofoourseraiseproblems ,inthewayof
establishing &homogeneous policyandactionprogramme forindustrial ,
commercial ,artisanandservices SMEsatCommunity level.
Accordingly ,although theCommission feelsthatproviding asolution
totheproblemofthedefinition oftheSMEsisnotapriority matter,
itisprepared ,ifnecessary ,toreviewthequestioninthelightof
theSME^needs,andtosetupaworkingpartyforthispurposes

2.STATISTICS
,#
Thelackofhomogeneous andde-tailedstatistios ontheSMEsatCommunity
levelobviously doesnotfaoilitate thedevelopment ofCommunity polioiea
andmotions-toassistthesefirms.Consequently ,theSME/Artisanat
Division hasjuatprepared adooument onthebasisofavailable national
statistics whichwillshow–especially forindustrial firms–thequantitative
portaaoeof-SMEsintheMemberStates,andrecentchanges.Afterconsultation
oftheGovernment departments ,thisdocumentwillbecirculated *
Thesituation willimproveinthenearfuture,sinoetheStatistical Officeof
theEuropeanCommunities (SOEC)hasbegunannualcoordinated surveysinthe
membercountries onindustrial aotivity ,firmsemploying lessthantwenty
personsbeinginoludedatintervals notexoeeding fiveyears.
3.ECONOMIC POLICY j
TheCommission fullysharestheParliament 'sviewthataneoonomiopolioy
givingtoppriority tofullemployment andstability isofthegreatest
importance forthemaintenance andexpansion oftheSMEs.
»
Theseareinfactthemainobjectives ofthefourthmedium-term eoonomiopolioy
programme ,published in1977i&document whichexplicitly acknowledges theneed
topromotetheprofitability oftheSMEsintheinterests ofeoonomio and
sooialequilibrium ,ofthevitality oftheeconomyandofthemaintenance of
competition .
4.SOCIALPOLICY
I
(a)TheCommission ,reoogniiing theimportanos ofproviding sooialseourity
ooveragefortheentirepopulation ,preparedadraftreoommendation on
thesubjeotin1976whiohwasendorsed byParliament andtheEoonomio
aniSooialCommittee (Doo*COM(76)295 final,16June1976)

(b)Th»Commission isveil aware "that sinoe i960 labour oosts have inoreased
proportionately faster than theoosts ofusing oapital ,onereason being
thegradual inorease inindireot wage costs .
The Commission has just raised this problem initscontribution tothe
1978 Tripartite Conference (Doo.II/795/77–"Investment andEmployment ").
5.TRAININO
Thetraining ofSMEmanagements isoneoftheproblems oommon toallthe
countries andalltheindustries .Inthemain ,itism.area .forthe
representative associations andthenational authorities .
Nevertheless ,theCommission proposesi
(i)toorganize asystematic comparison ofthemeasures reoently adopted
intheMember States ,with aview todetermining which arethemost
effective andoould bealso used intheother Member States ;
(ii)toprovide ,through theSooial Fund ,finanoial assistance formanagerial
training courses for the SMEs .Apilot projeot has just been ohooenj
(iii)toexamine ways andmeans ofencouraging ,again through theSooial
Fund ,managerial consultancy servioes fortheSMEs asamethod of
training SMEmanagers .
6. INFORMATION
Aooesa totheinformation they need isaspecial problem forthe SMEs .
Accordingly ,further toanexamination ofthematter byitsadhopworking
party oninformation forindustry ,theCommission organized attheendof
1977 aWorkshop during which special emphasis was laid onmethods andmeans
ofohanneling information totheSMEs .

Iti»hoped that theae initiatives will inthenear future yield valuable
lessons .
Theestablishment oftheEuropean EURONET network ,soon tobeoome operational ,
will place scientific ,technical andsgoic-econozaio data atthedisposal of
firms ,including the SMEs .
7.FINANCim
TheCommission is*?ell&war® ofthefinancial problems theSMSsh&ve tocontend
with ,and .itiedoing everything itoantohelp them tooverooroe theae
problems o
Generally speaking ,thefive Bain Community sources offinanoe areavailable
totheSMEa aswell astobigcompanies ,Tomake these funds more effective
andtoadapt them also totheSMEs *needs ,several improvements have been
reoently made orproposed .Forexamples
(a)-thetotal amount of"global **loans (i.e. consolidated EIBloans tobe
on-lent toBmall businesses bynational agenoies )rose from 61.2 mu.a.
in1976 to91«3sbu.a.in1977 9anincrease ofnearly 50$.
Onthe
basis ofacontract eigned with th®United Kingdom Government ,this
Government will guarantee borrowers ,against payment ofasmall commissior
against theeffeotB ofexchange rate fluctuations .TheIrish Government
hasannounced inarecent budget that itwill also normally bear the
burden ofexchange risks 5
(b)guidelines fortheadmisai strati onofthsSocial Fund in1977givetop
level priority toapplications from theSMEs orgroups ofSMEs for
operations relating toadaptation totechnical progress ;
,*
<o)withregard tothaRQ^lcnB-i proposals laid "bftfo*0®"kh®
Counoil inJxu& 1977 iak«accounto£'wopoints msda byth®SKE»#
namelys

*•S■»
(i)th»BT-Eer«qu«at«4thattiiftr*beopporturdties aor -o
begrantedbytheFundoiiloansloadetofir^abyt>-aEIBandbytheother
Community fur.de.Oneofthequalifying osi-gorieaisinfaotther.Kfc*t
(ii)theSMEerequestedtheIntroduction of
conditionsforthegrantir>£ofassistance froratheF-.r-clfortheartisan
andtourismsectorsandservicesingeneral(thepossibility c<f^rait^ing
consolidated applications )„
WaysandEeanBofmakingthes-3ucvrawevenKor©easilyscoesaillatnthe"MEs
arenowbsingstudiado
Withregardtofinancingingeneral,ih*work!Jigparty©aSHE/Artisan**,vr.ich
ismannedbynationalofficials,fe&stogonitswanduationoftheprsbl^-of
theSMEa5®?<raity®apitalo
Forthispurpoae,themembershay®draftedreportsonthesiU&»i9ii8 *-•
owncountries' (Doc.12Q4/lIl/75)»
TheCommission hasalsoreoeivedtfe«resultsofRztx&jonj^^turs^ca^^l .
needsinEurope,*subjectof'sp«ol&l ralevanoetotheSMS®*
OnthebasisofthisworkandofForkcarriedcatrecentlybj,o^hes Mca
(Q„gaarecentlypublishedUIECi?studysnth-financing o*'•?MB#}S^hz
Commissionstaff,workingviththerolovant»o£,i®s«>.dth-
villcaz*ryouts^i st/wly-teitu. dw/.X....g--A*jJ'-iv*'P*
siiopso&n "b©"fcalcQn1.$^"till.3
8»TAXATION
tfes.ttb®ad^iviPtrativ® »Vliga"lems
n./T.***(a)TheCommissi©ai® of "■*
arisingfromtaxation «r«rols-tivalyseevlsrfc«^JG?»"vv
companies andthe*theymay–-*-0*-ll®rC6SBire c":'*'*<s"'•
firms.••;«><5arcessi'.'sco^tsf-irth.«
Simplification ciprc&»c,v/=■" ".»<*..*.■ -a-****
desirable® Something it&sa.ctfc •„•«vxiv.©?
VATdireotiv® ."V-o?■*■'O/
^ iÅ:A»Ksi,U■*■

Other efforts will bemade inthefield oftrade between theMember States
measures tosimplify controls andformalities atintra-Comnmnity frontiers
arenowbeing studied *This work will continues
(b)TheCommission isalso well aware ofthefaot that thecontinuity of
family firms canbehampered byoertain taxrequirements ,inoluding ,of
oourse ,heavy death duties .Onesuggestion meriting further study in
this connection isthat heira ofsmall businesses should begiven more
time topay *
ι
9c COOPERATION
TheCommission hastaken measures atthree levels toenoourage oooperationt
(a)bypermitting certain exemptions from thecompetition rules *The
Commission adopted twomajor measures attheendof1977 widening still
further theopportunities available totheSMEs ;
(i)therelative threshold fortotal turnover established in1970 bythe
communication onminor agreements hasbeen inoreased from 15nu.a *to
50mu.a .j
(ii)thethreshold fortheshare ofthetotal market whioh maybeheld by
firms signing certain categories ofspecialization agreements hasbeen
raised from 10to15$ofthemarket fandthetotal turnover permissible
hasbeen raised from 150 asu«a >to300mu.a *
In1978 ,theCommission will press forward further work onmeasures inthis
field .Itwill give itsbacking totheSMEs with regard toquestions of
Bub–oontraoting ,ofblock exemption forcertain patent licensing agreements
andcertain exolusive dealing agreements ,andwith regard toexemption from
theprior authorization requirement ujjder Artiole 66oftheECSC Treaty with
regard tomergers «

-10«
(b)byproposinganappropriate legalformofbusinessassociation ,i.«.
-theEuropeanCooperation Grouping s
FollowingtheopinionsfromParliament andtheEconomicandSocial
Committee,aaamendedproposalwilltotransmitted bytheCommiseionto
theCouncil ;
(o)bysettingup,atoperational level,the
OnthebasisofexperienceinstartinguptheBGC?theCommissiondecided
inJuly1977toimprovetheorientation ofitsworkbyauthorizingittos
(i)concentrate 0x1oertalnpriorityaeotorsj
(ii)taketheinitiativeitselfinmattersofinter-firmcooperation ?
(iii)toincludefirmsfromcertainnon-membercountriesinitswork,on
certainconditions®
10.EXPORTS
MajorIncentive®totheSMSetoexperttheirproduct®*realreadybeinsmade
intheMemberStates.1km®theless,thereieevidencethattheSJffisdo
notexportasroachastheycould.
TheCommissionstaffistherefor® nowconsidering variouswaysandmasmsof
stimulating SMEexportstooountriesouteidetheCommurity,PoBsiDilities
inolude :
(i)starting^-up aidforexportgroups ?;
(ii)financialsupportforSMEstakingpartinfair®andexhibitions ?
(iii)theorganization ofvisits®fprospective oustoaera .fromnoxwaeabe*
countries ;
(iv)theextensionoftheexportadviserssystemalreadyu.ssdincertain
MemberStates.

11.SIMPLIFICATION OPADMINISTRATIVE FORMALITIES
"rforktosimplifyadministrative formalities ,whichhasalready "beguninthe
taxationareatasnotedatparagraph 8above,shouldbeextendedtootherfieli'.:
TheCommission willregularly remindtheMemberGovernments oftheimportanoe»-
psychological aswellaseoonomlo –oftheproblemof"redtap®",andwillmake
recommendations forsimplifying theadministrative procedures asmuchas
possible *
,*
TheCommission Isabouttoproceedtoanexamination ofwaysandmeansof
applyingintheCommunity –ashasalreadybeendoneinCanada–themaximum
response burdencriterion fortheSMEBwithregardtotheadmini,strative
formal!tia3thatcanreasonably berequired ofthem.
12.PUBLIC PROCUREMENT
Toencourage theSMEBtosubmittendersatCommunity level,theCommission will
oonsider thepossibility ofcirculating amonthlynotioelistingthepublio
contracts published intheOfficial JournaloftheEuropean Communities toall
theorganizations representing thevariousbranches ofeconomicaotivity both
atCommunity levelandatnational levels.ItiBproposing toorganize an
information campaignfortheorganizations representing theSMEstoexplain
Community machinery todprocedure atobefollowed andtoencourage theSMEsto
submittenders.
Itwillalsoconsiderwiththepublicauthorities howpubliocontracts oould
bemademoreeasilyaooesBible totheSMEb.
13.SUB-CONTRACTING
Withaviewtodealingwithwha,t.»®em to.b«themainproblemsarisinginthis
field,namelytheproblemofbringingsub–contractors andprincipals into
oontaot,therelations betweenthetworx-rfc5.®s(ethics),andterminology ,

Th«CoimiB&ion feael
(i)published alirtof*»«**• Ablins on&permanent orMmi-p«r®anent
baeis withsubcontracting (Doc ,,6Cl/lIlA 6)?
(ii)instructed theBusiness Cooperation Centre tocarry outcertain
coordination tasks between these agencies .Thisnasledtothe
preparation ofadraft terminology ofsubcontracting work ,facilities
andproducts which islanded foruseasabasis foracensus of
sub-contracting fir-ns carried outbynational orregional
subcontracting bodis ^. Thepublication ofharmonized catalogues
willimprove market transparency withregard totnesupply of
sub-contracting work .
KoWever ,itmustbeacknowledged thatinmatters ofestablishing contact
between subcontractors andprincipal *,theminresponsibility lieswith
th«twoparties .Someassistance canbeaccorded Vthetrad,organisation *
(8egt feythebovxses andmoreparticularly byfairs andexhibitions )
Beeaueeofthefluidity ofcommercial relations andtheneedtoact
'quickly »aComity bourse vculdtosovalid roletoplay .
14.SEARCHAIT)DSVELQP!gl5i?
Its1972proposal foraregulation concerning theintroduction ef
CoBununi fcydevelopment contract ehaving bee*dropped ,theCowiswon
proposed aCouncil decision concerning thepromotion oi'fatvprojects
Ifindustrial interest aspartofItscommunication tcth«Council cf
30June 1977on."Common policy forscisncr -andtechnol^g ,-**
(Boo.COM(77)283 final ).Onealaofth.'."proposal wastopromote
thecooperation oftheSMBinr®search sr .-3.developraent .

Thi»prci^sal r»astrongly ®"\r>z-»eo.bothby^oaomiomadSocial
Commitieetn*.byParliament .AJ'fchov,ehH'-JCJ«oftheimportance ofsupport
forindustrial innovation ,especially tur.ongtheSMEa,mot»tofthe
MemberStateswerestillnot.yetinaposition toapprovetheproposal
initspreseriform.Inthisconnection ,thsCcjimission hasbeanasked
tostudytheDIPiterfurtherduring1978*Itis^OWworkingoutanew
positioninthelightofexperience obtained andinformation received
inthecourseofitscontacts withthoseworkingintherelevantfields.
TheCouncilDecisionof14February 1977(OJNoL61of5Maroh1<>r7)
concerning atechnological research programme forfootwear industryis
oneoftheo^asurcs bearingwitnesstotheCompassion 'ssustained interest
inresearoh problems astheyconcerntheSJ«iEs.
15.MEASURES RELATING TOITTOUHTRIAL SECTORS „
TheSMBshave animportant roleinmanyIndustrie!sebtors,.
Whenoperations toassistkpeolfio a«?ortorc arebeingundertaken ,
theCommission willtherefore ensure,thatmeasuresthatcanhelpthe
SMDstoadapttonecessary changeareinfacttaken.
Allavailable facilities willbedeployed forthisobjective .
16.CONCERTED MEETINGS BETWEEN THEl^OHIES FEPRTOEffiTINO THESMFfeAND
TOECOMMISSION
Inordertostrengthen theparticipation o"thoseworkingforandwith
theSMEsJJQtheCommunity'sdeoisiorwnak :>pprocess,theCommission 'sservic
willinviteisthecourseoftimetheiousSfflorganizations toattend
discussions ontheproblems whicharie«*ftheaimbeingtoreachbyjoint
actionsolution totheseprobitiesin».JBUVOconcerted waythaninthe
pest•
ThaCommission fealsthatthr'aprooe isbetteradaptedtothareal
needsof'-beo.^-ndox'theartist"*%sectorthanwouldbetheestablish *
of" committee *