Communication from the Commission to the Council and the European Parliament - The business test panel: a pilot project
Date: 1998-03-30
Institutions: European Commission
Subjects: EU law, competitiveness, legislative procedure, single market, small and medium-sized enterprises

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.03.1998 
COM(1998) 197  final 

COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

THE  BUSINESS  TEST  PANEL 

A  PILOT  PROJECT 

THE  BUSINESS  TEST  PANEL 

A  PILOT  PROJECT 

1. 

INTRODUCTION 

regulation  carries  a  high  economic  cost  and  endangers 

Excessive 
the 
competitiveness of industry and business and its employment potential1.  Unsuitable 
and  imprecisely  targeted  measures  may also adversely  affect  the  functioning  of the 
Single  Market.  All  regulations  must  be  fully  justified,  respect  the  principle  of 
subsidiarity,  be  proportionate 
to  their  objectives  and  not  impose  excessive 
compliance  costs  and  administrative  burdens  on  enterprises,  in  particular  on  small 
businesses. 

In  recent  years,  the  Commission  has  launched  several  initiatives  to  simplify  and 
improve  the  quality  of  legislation  in  order  to  implement  the  orientations  of  its 
regulatory  policy  guidelines  adopted  in  19962.  The  SLIM  programme  has 
developed  a  new,  targeted  approach  to  reviewing  and  simplifying  Single  Market 
legislation,  in partnership  with the Member  States and with those operators  affected 
by  the  legislation.  The  Better  Law  Making  report  provides  an  overview  and 
highlights  Community  action  on  simplification.  The  newly  created  Business 
Environment  Simplification  Task  Force -BEST- will  make a further  contribution  to 
improving  the  environment  for  business  by  proposing  measures  to  reduce  the 
unnecessary  administrative  and  regulatory  burdens  which  restrain  the  development 
of  European  business, particularly  SMEs.  Finally,  the  business  impact  assessment 
system  which 
to  be  a 
internal  Commission  procedure 
comprehensive  analysis of the impact on business, in particular small firms, of those 
legislative  proposals  which  are  relevant  for  business.  An  important  part  of  the 
process  leading  to  the  final  impact  assessment  is  the  consultation  procedure,  both 
with  outside  interests,  including  business  organisations,  and  informally  with  the 
Member  States.  Further  improvements  to  the  system  and  procedures  have  been 
sought, in particular, by business organisations and the Council.  The Commission  is 
currently  preparing  revised  guidelines  for  its  internal  working  procedures  on  the 
completion of the business impact assessments. 

intended 

is  an 

is 

In the light of some developments  at national  level to improve the assessment  of the 
costs  and  administrative  consequences  of  proposed  legislation,  the  Commission 
decided,  in  the  Action  Plan  for  the  Single  Market,  to  undertake  pilot  projects  to 
improve consultation  procedures with business on the costs of implementing  certain 
new  legislative  proposals.  As  a  pilot  exercise,  the  European  Business  Test  Panel 
was also proposed (pilot projects to be launched during  1998). 

The  Special European Council on  Employment in Luxembourg (November  1997)  asked both 
the  European  legislator  and  the  national  legislators  to  press  on  with  their  efforts  to  simplify 
the  regulatory  and  administrative  environment  for  businesses  and  especially  small  and 
medium-sized enterprises 

SF,C(95) 2255/7 of  18.0Ï.1996. 

Consultation of the panel 

•  does  not  aim  at  assessing  the  objective  and  merits  of  the  proposed  legislation, 
but at quantifying  the compliance costs and assessing the administrative burdens 
for business of proposed new legislation within  tightly  defined  time limits. This 
will allow the Commission to receive direct feedback from individual enterprises, 
including  SMEs, and to judge  whether  it has achieved  the  necessary  balance  in 
terms of costs and benefits in its legislative proposals. 

• 

• 

will  also  aim  at  identifying  alternative  solutions  which  would  achieve the  same 
objective in a less burdensome way. 

will  not  entail  circulation  of  draft  proposals.  Material  will  be  limited  to  a 
synthesis of key elements which have a bearing on compliance costs. 

•  will be without prejudice to the Commission's right of initiative and competence. 

On  the  basis  of  the  results  of  these  pilot  projects,  the  Commission  will  consider 
whether  to  take  this  initiative  forward  and,  in  particular,  the  establishment  of  a 
European Business Test Panel at Community level. 

2. 

THE  OBJECTIVE 

The ultimate objective  of each initiative is to improve the Commission's  regulatory 
impact  analysis  procedures  and  in  this  way  adopt  better  quality  proposals.  The 
Business  Test  Panel  should  focus  primarily  but not  exclusively  on  the  compliance 
costs  and the  administrative  burdens that may hinder the development  of trade and 
industry.  This  would  be  useful  and  relevant  information.  The  pilot  phase  will 
include  proposals  from  a limited  number  of areas.  In  any  event,  given  that  Single 
Market  legislation  essentially  aims at removing burdens and barriers for  companies 
and  that the  Commission  legislative activity  has drastically  reduced,  the  number of 
to  the  Business  Test  Panel  will 
legislative  proposals  suitable  for  submission 
inevitably be small. 

The  Test  Panel  would  not  replace  the  normal  consultation  procedures  but  be  a 
supplement to it in the final  phase of preparing  legislative  proposal.  As with other 
consultation  procedures,  recourse  to  the  panel  will  be  without  prejudice  to  the 
Commission's right of initiative.  The results of the consultation of the panel will be 
available  to  the  Commission  when  it  takes  its  final  decision.  Representative 
organisations  and  other  interested  bodies  will  thus  continue  lo  be  consulted  by  the 
Directorate  General  concerned,  and  the  Commission  will  continue  with  its  normal 
practice  of  wide  consultation,  for  example,  through  Green  Papers,  working 
documents  and  the  holding  of  meetings  with  outside  interests  including  business 
organisations. 

3. 

T HE  APPROACH 

The Business Test Panel will have the following  characteristics: 

- 

- 

- 

It  should  be  representative.  It  should  therefore  comprise  firms  of  all  sizes, 
including,  but  not  exclusively,  SMEs,  and  should  have  a  sufficiently  broad 
geographical and industrial coverage, including the retail and the services sector; 

It should  provide reliable results. Firms that take part in the Test Panel will need 
to  understand  the  implications  and  be  ready  to  undertake  the  necessary  work. 
Participation will be on a voluntary basis. 

It  should  itself  impose  very  light  administrative  burdens  for  the  Commission 
departments  (and  national  administrations)  and  for  the  Test  Panel's  member 
firms.  Existing structures will therefore be used as much as possible. 

- 

It should be operational  in order to meet exactingly  short timescales and thereby 
avoid delaying the legislative process. 

-  Confidentiality  should be assured.  Consultation  will meet existing  Commission 
confidentiality  rules.  Businesses will respond to the questionnaire anonymously. 

4. 

SETTING  UP THE  PANEL 

Various options for the form of the Test Panel can be considered: 

•  A  European  Business  Test  Panel,  under  the  Commission's  direct  management 
and  responsibility.  This  would  imply  the  need  to  consult  many  thousands  of 
firms to get a statistically valid result. 

•  We  could  rely  on  the  main  representative  business  organisations  at  European 
level,  working  through  their  existing  networks  to  contact  firms  in  the  fifteen 
Member States; 

•  We  could  use  existing  national  panels,  or  those  to  be  set  up  within  national 

administrations or national business organisations; 

•  We could create a network of specialist institutions or consultants. 

After  consultation  of  the  members  of  the  Internal  Market  Advisory  Committee,  the 
Commission  considers  that  a  decentralised  approach  should  be  pursued  as  far  as  the 
launching of pilot projects  is concerned.  For this trial period, each participating  Member 
State  (many  of  which  already  have a consultation  structure)  is  invited  to  set  up a panel 
structure  which  takes  account,  where  appropriate,  of  its own  consultation  traditions and 
procedures or bodies.  Each Member State will have the responsibility, within the criteria 
defined  above  and  in particular  with  regard  to representativeness,  to decide the size and 
composition  of  the  panel.  Panels  could  be  set  up  either  directly  by  the  national 
administration,  or  in  collaboration  with  national  business  organisations.  Each  Member 
State  must  designate  a correspondent  in their  administration  (or  business  organisation), 
who would  liaise with the Commission, be responsible  for organising  the consultation at 
national level and ensure that the strict conditions set by the Commission, in particular on 
the time limit for consultation, are respected, 

5.  ORGANISATION 

Member  States  will  be  responsible  for  the  practical  organisation  of  the  consultation 
process  with  the  companies.  The  Commission  will  be  responsible  for  the  selection  of 
each  proposal  for  Test  Panel  consultation  and  the  assessment  and  processing  of  the 
results of the consultation.  The Commission will make the necessary material  available 
(summary  of  proposed  legislation,  questionnaire)  to  Member  States.  The  results  of  the 
consultation will be made public. 

5.1.  The choice of legislative proposals 

The  Business  Test  Panel  will  be  invited  to  consider  certain  proposals  only 
from  those that  are  likely  to have a significant  impact,  including  in  terms of 
compliance  costs  and  administrative  burdens,  on  business.  The  Commission 
will  choose on the basis of  its annual  work  programme  the  indicative  list of 
envisaged  legislative  actions  that  will  be  subject  to  consultation  of  the  Test 
Panel and a business impact assessment. 

The  Business  Test  Panel  will  initially  be  consulted  on  those  draft  proposals 
for  legislation  which  affect  a wide  range  of sectors  and  a significant  number 
of businesses in the panel, rather than on legislation that concerns a very small 
number of sectors. 

5.2.  The consultation 

For  the  measures  selected  the  Test  Panel  will  be  consulted  within  defined 
deadlines before  a formal  proposal is adopted by the Commission.  This could 
mean that consultation of the individual enterprises which are members of the 
Panel  on  aspects  such  as compliance  costs  and  administrative  burdens  could 
be  launched  in  parallel  with  possible  consultation  of  European  business 
organisations  concerned  which  aims  at  a  much  broader,  sometimes  political 
objective.  This consultation must not hold up the legislative process. 

Consultation  will  be  based  on  short  explanatory  memorandum  of  the  draft 
proposal  indicating  the  main  legislative  provisions  that  may  necessitate 
internal  adjustments  for  the  enterprises  concerned  (in  each  Community 
language).  A standard  questionnaire  which  will  also  be  developed  in each 
Community  language,  will  focus  on  quantifying  compliance  costs. 
It  will 
draw a distinction between recurring  and non-recurring  compliance  costs and 
administrative  burden.  The  questionnaire  may  also  offer  respondents  the 
opportunity  to  propose  alternative  solutions  which  would  achieve  the  same 
ends in a less burdensome way.  Total time spent by any individual  enterprise 
to complete  each exercise should be kept to the minimum necessary. 

Each national correspondent will be responsible for receiving and  distributing 
to  the  Panel  members  all  the  necessary  material.  The  Test  Panels  will 
normally  have  three  weeks  to  respond,  although  in  some  cases,  a  shorter 
deadline  may  be  set.  Individual  businesses'  responses  to  the  questionnaire 
will be forwarded  directly to the Commission. 

Electronic transmission systems, such as the Internet, will be used to speed up 
the process. 

5.3.  The analysis of the results 

The Commission will analyse and evaluate both the compliance costs and the 
administrative  burdens  of the proposed  legislation,  identifying  any  provision 
of the draft  legislation, which have been indicated as problematic. Compliance 
costs linked with the proposed legislation will also be  quantified. 

Any  Member  State  may  itself  analyse  the  results  of  the  consultation 
undertaken at national level. 

5.4.  The follow  up 

initiating 

The  Directorate  General 
the  proposal  will  assess  whether 
amendment  is required  to the draft  proposal  for  legislation  to take account  of 
the  possible  concerns  expressed  by  the  enterprises  consulted.  The  results  of 
evaluation report will be included with the business impact assessment as part 
of  the  COM  document  sent  to  the  Council  and  European  Parliament.  The 
Directorate  General  concerned  will  indicate  to  what  extent  the  results  of  the 
consultation have been taken into account. Business organisations at European 
and  national  levels  will  also  be  informed  of  the  results  of  the  consultation, 
which should also be made available on the Internet. 

6. 

TRIAL  PERIOD-  PILOT  PROJECTS 

In  the  initial  phase,  pilot  projects  will  be  launched  on  a  voluntary  basis,  in  each 
Member  State  that  so  wishes.  A  broad  geographical  coverage  will  be  sought. 
Discussion  at  the  informal  meeting  of  the  Ministers  responsible  for  the  Internal 
Market  on  13 February  identified  Member  States  that  are  willing  to participate  in 
this trial period. 

A thorough  evaluation of the process as well as the pilot projects  themselves would 
be  made  in  1999.  This  evaluation  will  involve  the  Member  States  which  have 
participated  in  the  pilot  phase  and  the  businesses  that  took  part  in  the  panel  and 
representatives from  business organisations. 

Following  this  thorough  evaluation,  the  Commission  will  consider  whether  it  is 
worth  taking  this  initiative  forward,  and,  in  particular,  the  establishment  of  a 
European Business Test Panel at Community level. 

Financial  Statement 

1.  TITLE OF THE ACTION 

The Business Test  Panel -  A pilot project. 

2. BUDGET HEADING CONCERNED 

B5-3000. 

3. LEGAL BASIS 

Treaty  establishing  the  European  Union  and  in particular articles  8a,  30 to  36, 52  to 66, 
99,  100,100a,  100b, 113, 169 and  171 thereof. 

4.  DESCRIPTION OF THE ACTION: 

4.1 General  objective 

The  Action  Plan  for  the  Single  Market  envisages  the  creation  of  a  panel  of  European 
companies, consultation of which will supplement consultations usually carried out by the 
Commission  in  the  preparation  of  its  legislative  proposals.  The  work  of  the  panel  will 
concentrate  on  the  compliance  costs  and  likely  administrative  implications  of  proposed 
new legislation. The Commission will begin pilot consultation of the panel during  1998. 

The consultation  will  enable  the  Commission to  evaluate the compliance  costs  and  the 
administrative  implications  likely  to  result  from  proposed  new  legislation  by  means  of 
direct dialogue with companies, including SME's. 

4.2 Period covered and arrangements for renewal or extension 

The pilot projects will initially run for a period of ONE YEAR. 

During this initial phase, pilot projects will be launched  in those Member States who 
want to be involved.  Participation  will  therefore  be voluntary. The  informal  meeting 
of  13 February  1998 of the Ministers responsible for the Internal  Market showed  that 
a number of Member States were already willing to take part in these pilot projects. 

Pilot projects will be subject to an in-depth evaluation in  1999.  This evaluation will 
involve the Member States involved  in the pilot phase, the companies vvhirli arc momlui 
of the panel and the representatives of business organisations. 

5.  CLASSIFICATION  OF EXPENDITURE 

NCE; CD. 

1-

6.  TYPE OF EXPENDITURE 

Operational  expenditure  essentially  comprises financing for  analysis of results as well  as 
evaluation  of  projects,  enabling  the  Commission  to  control  costs  and  the  administrative 
consequences of the application of new legislation for companies. 

7.  FINANCIAL IMPACT 

7.1.  Method of calculation of the cost of the action 

The  creation  and  consultation  of  the  panel  will  be  assured  and  financed  by  the 
Member States. The action will not require additional financial  and other resources. 

7.2 

Itemised breakdown of costs 

Breakdown 

Analysis of the results and evaluation of the projects 

Total 

8. FRAUD PREVENTION  MEASURES 

IX' in I-XT I (current prices) 

12 months 

100,000 

100,000 

I 

The  Commission  departments  will  check  the  studies  and  evaluations  requested  before 
payment,  taking  into  account  contractual  obligations,  economic  principles  and  the 
financial  and  general  management.  Anti-fraud  provisions 
principles  of  sound 
(supervision,  submission  of  reports,  etc.)  are  included  in  all  agreements  or  contracts 
between the Commission and recipients of payments. 

9. ELEMENTS OF COST-EFFECTIVENESS  ANALYSIS 

9.1.  Specified  and quantified  objectives; target  population 

The  pilot  projects  to  be  launched  by  the  Commission  in  1998  will  concentrate  on  the 
question  of  the  compliance  costs  and  the  likely  administrative  implications  of  new 
Commission  legislative proposals. 

They will  be carried  out  in a limited  number of  Member  Slates and  will  involve  panels 
of  several  hundred  companies,  sufficiently  representative  in  terms  of  company  size, 
sector and geographical coverage. 

The consultation  will enable the Commission  to obtain  a better evaluation  of the  likely 
cost  and  administrative  consequences  of  proposed  new  legislation  by  direct  dialogue 
with individual companies, including SME's and, if necessary, to adjust  such  legislation 
to encourage competitiveness and the creation of new jobs. 

2 

The evaluation will be carried out on a case-by-case basis by analysis of results received 
from the hundreds of companies in the panel from the various participating countries. 

The pilot projects are directed, via the Member States, at companies of any size likely to 
be affected  by the proposed legislation subject to consultation, and which need to base 
their activities on clear and simple legislation geared to their needs in order to exercise 
their  rights  within the  Single  Market without  running  into  unnecessary  restrictions or 
bearing excessive expenses. 

9.2. Grounds for the operation 

The ultimate objective  of the creation of the panel  of European companies  is to 
allow  companies  to  benefit  fully from the  advantages  of  the  Single  Market  by 
improving  relevant  legislation.  It will  concentrate  on the  compliance  costs  and 
administrative implications likely to result from the new proposed legislation. The 
economic advantages which will result from this evaluation should achieve  fully 
justify the proposed intervention. 

It  is  advisable  to  consider  this  action  in  the  light  of  the  Commission's  other 
activities  regarding  the  simplification  and  consolidation  of  legislation  (SLIM, 
Business Impact Assessment) 

The creation of the "panel of companies" was prompted  by the need to confront 
the different  perspectives of legislators and those who are directly affected  by the 
legislation,  namely  companies,  and was  particularly  aimed at the costs  likely  to 
result from the application of certain proposed new legislation. 

The Commission examined  several  options for the establishment  of the panel  of 

companies: 

-  Statistically  sound  representativeness.  This  representativeness,  however, 
would require the involvement of thousands of companies. 
- The Commission could have made use of the networks of organisations of the 
most representative  companies  at European level  to contact companies  in the 
15 Member States. This approach would have been relatively complicated and 
very costly. 
-  The  Commission  could  have  used  existing  national  panels  or  those  to  be 
established in national administrations or company organisations. 
-  The  Commission  could  have  created  networks  of  specialised  agencies  or 
consultants. 

After  consultation  with  the  members  of  the  Consultative  Committee  of  the 
Internal  Market,  the  Commission  decided  that  decentralisation  was  the  best 
approach because it involved  lower administrative costs, greater reliability and 
greater effectiveness  in managing the panel. 

This  decentralised  approach,  however,  should  be  accompanied  by 
centralisation at Commission level of the processing and analysis of the results 
of consultation, which would involve low financial expenditure. 

3 

9.3 Monitoring and evaluation of  the operation 

There will be an in-depth evaluation during  1999 involving the Member States 
taking  part  in  the  pilot  projects,  as  well  as  the  companies  on  the  panel  and 
representatives of company organisations. 

A decision, to be forwarded to the Council if necessary, to extend the pilot 
projects of the panel of European companies will be taken in light of this 
evaluation. 

10.  ADMINISTRATIVE  EXPENDITURE  (PART  A  OF  SECTION  III  OF  THE 
GENERAL BUDGET) 

The  administrative  resources  necessary  will  be  provided  by  the  annual  Commission 
decision  on  resource  allocation  taking  account  of  the  staff  and  supplementary  amounts 
accorded by the budgetary authority. 

10.1 Effect  on the number of posts 

Types of post 

Staff to be assigned to 
managing the operation 
temporary 
posts 

permanent 
posts 

Officials 
or temporary 
staff 
Other resources 
Total 

A 
B 
C 

1 
1 
1 

3 

Source 

Duration 

Additional 
resources 

1 YEAR  from 
the launch of 
the pilot  project 

Existing 
resources in 
the DG or 
department 
concerned 
1 
1 
1 

3 

10.2 Overall financial  impact of additional human resources 

Amounts 

324,000 

(ECU's) 
Method of calculation 

108,000 x 3 = 324,000 

Officials 
Temporary  staff 
Other resources (indicate 
budget heading) 

Total  1 

324,000  1 

By use of existing resources to be assigned to administration of the  action (calculation 
based on titles A1, A2, A-4, A-5, A-7) 

^/>o 

10.3 Increase in other administrative expenditure as a result of the operation 

Budget heading 
(no. and title) 

Amounts 

Method of calculation 

(ECU'S) 

A-701 Missions 

8,000 

Total 

1 

8,000 

I 

Missions (800 x 10) (8 Member States have 
already registered to take part in this initial 
phase. Greater participation may be 
expected: 2 more missions are expected) 
(6,317/8= 807 ECU/average; 807 x 2: 1,614 
ECU) 

8,070.24 

Expenditure will be financed within the total budget allocated to DG XV. 

xn 

ISSN 0254-1475 

'  COM(98) 197 final 

DOCUMENTS 

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08  10  09  01 

Catalogue number  :  CB-CO-98-209-EN-C 

ISBN 92-78-32864-2 

Office  for Official  Publications of the European Communities 

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