REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF REGIONS AND THE EUROPEAN INVESTMENT BANK STATE OF THE SINGLE MARKET INTEGRATION 2013 - Contribution to the Annual Growth Survey 2013 -
Date: 2012-11-28
Institutions: European Commission
Subjects: economic growth, economic integration, economic statistics, forward studies, governance, job creation, single market

EUROPEAN 
COMMISSION 

Brussels, 28.11.2012  
COM(2012) 752 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE 
COUNCIL, THE EUROPEAN CENTRAL BANK, THE EUROPEAN ECONOMIC 
AND SOCIAL COMMITTEE, THE COMMITTEE OF REGIONS AND THE 
EUROPEAN INVESTMENT BANK 

STATE OF THE SINGLE MARKET INTEGRATION 2013 

- Contribution to the Annual Growth Survey 2013 - 

EN 

   EN 

 
 
 
 
 
  
 
 
INTRODUCTION 

An  integrated  Single  Market  is  a  key  driver  for  economic  growth  and  jobs  and  offers 
additional opportunities for European citizens. It therefore plays a central role in achieving the 
objectives of the Europe 2020 strategy.  

As  announced  in  the  June  2012  Commission  Communication  on  better  governance  for  the 
single market1, this report aims at monitoring the functioning of the Single Market within the 
European semester process. It presents an analysis of the state of Single Market integration in 
key areas with the greatest growth potential, i.e. services, networks and digital economy2. The 
objective  of  this  report  is  to  identify  policy  priorities  in  the  context  of  the  Annual  Growth 
Survey 2013, which if carried out by Member States, would contribute to unlocking the full 
Single  Market  growth  potential,  and  to  removing  remaining  obstacles  to  further  integration. 
This  report  also  calls  to  step  up  efforts  to  ensure  better  implementation  and  enforcement  of 
rules that are already in place. 

1. 

SINGLE MARKET INTEGRATION CHECK-UP 

By  removing  the  barriers  to  the  free  circulation  of  people,  goods,  services  and  capital,  the 
Single  Market  allows  firms  to  operate  on  a  bigger  scale,  thereby  enhancing  their 
capacity to innovate, to invest, become more productive and generate jobs. The increased 
competition  resulting  from  the  integration  process  works  as  a  powerful  incentive  to  offer  a 
wider  variety  of  cheaper  and  higher  quality  products  for  European  consumers,  as 
indicated by the Consumer Markets Scoreboards. Labour mobility is essential to contribute to 
a genuine European labour market that enables a good match between employers' needs and 
job seekers' skills, enhancing EU companies’ productivity and hence growth and employment, 
and  helping  eliminate  the  coexistence  of  persistent  high  levels  of  unemployment  in  several 
areas with labour shortages in faster-growing regions of the EU.  

1.1. 

The four freedoms 

1.1.1.  Goods 

•  Although at a slower pace, the integration of the goods market is still progressing 20 
years after the launch of the Single Market with intra-EU trade representing around 17% 
of EU GDP in 1999 and close to 22% in 2011. The growth of extra-EU exports has been 
more  dynamic,  but  its  value  equals  only  some  12%  of  EU  GDP.  This  indicates  that  the 
Internal Market is still of significant importance for European companies and that there is 
still potential for improvement in order to stimulate growth of intra-EU trade. 

•  The  positive  general  trend  in  terms  of  integration  hides  rather  contrasting  situations 
among EU Member States. There are positive trends in terms of integration of the goods 
market, as indicated by the evolution of intra-EU imports and exports to GDP ratios in the 
period 1999–2011, in CZ, DE, HU, LT, LV, NL, PL, SI, SK, whilst some negative trends 
or stagnation can be seen in EL, ES, FI, FR, IE, LU and UK. In most of the countries from 
the first group, the deepening of integration was a part of the process of catching-up, as 

1 European Commission Communication "Better Governance for the Single Market", COM(2012)259 final 
2 These sectors were also identified among the most problematic for consumers and with the biggest impact on 
household budgets in the recent European Consumer Agenda. 

2 

 
 
 
 
 
 
 
 
 
                                                            
they  started  from  a  low  level  of  openness  well  below  their  potential.  As  regards  the 
achieved  level  of  integration  (in  terms  of  the  ratio  of  intra-EU  trade  in  goods  to  GDP), 
smaller  EU  Member  States  are  naturally  more  open,  except  for  EL,  CY  which  were 
relatively closed, followed by PT and the Nordic countries. 

•  Looking at the country group with increasing integration in the Single Market, most of the 
countries  (PL  and  to  some  extent  CZ,  SI,  DE,  SK  and  NL)  have  experienced  an 
improvement in their price competitiveness position since the end of the 1990s3. LT and 
LV  were  particularly  successful  in  targeting  markets  with  higher  GDP  growth  over  that 
period. HU seems to have benefitted mainly from non-price competitiveness4. For almost 
all  these  countries  higher  integration  within  the  internal  market  also  resulted  in  an 
improvement in their trade balance position with their EU partners.  

Chart 1. Evolution of intra-EU trade in goods 

Data source: Eurostat 

•  As regards the  groups with decreasing or stagnating  integration (in  terms of the ratio of 
intra-EU imports and exports in goods to GDP), ES and LU suffered from both relatively 
low demand growth in their partner economies but also from some cost competitiveness 
losses.  Also  EL  experienced  cost  competitiveness  deterioration.  FI  and  the  UK  faced 
problems  with  non-cost  competitiveness.  These  are  the  factors  which  explain  the 
evolution  of  integration  from  the  export  side,  but  imports  are  strongly  correlated  with 
exports.5 Nevertheless,  for  many  of  these  countries the  negative  integration  trend  was 
associated with a deterioration of their trade balance with their EU partners6. 

•  The  EU  is  now  integrating  faster  with  third  countries  than  internally,  which  reflects  the 
globalisation process and the faster growth demand in many emerging markets. This is not 
necessarily a negative sign since there is no trade-off between intra-EU trade and global 

3 Measured as depreciation of real effective exchange rate with unit wage cost in manufacturing as a deflator. 
See: http://ec.europa.eu/economy_finance/db_indicators/competitiveness/data_section_en.htm 
4  Since  neither  price  competitiveness  nor  foreign  demand  explain  its  trade  evolution  well,  though  non-price 
competitiveness is hardest to measure. 
5 Exports allow financing imports and there is a sizeable input of imports in exports, especially with the rapidly 
increasing role of international production chains. 
6 Integration and competitiveness appear to be mutually supportive, creating virtuous circles, through e.g. higher 
competitive pressure and access to better or cheaper production inputs. 

3 

 
 
 
 
 
 
 
 
 
                                                            
trade. Member States who increased their integration in the global economy are also 
those who have demonstrated the highest integration dynamics within the EU7.  

Chart 2. Comparison between intra-EU and extra-EU trade in goods 

Data source: Eurostat 

1.1.2.  Services  

•  The  intra-EU  trade  in  services  followed  broadly  similar  patterns  as  the  trade  in  goods 
(Chart 3). However, the level of integration in this sector that represents more than 70% of 
the economy continues to be significantly lower than in the goods market. And there are 
currently  no  signs  of  catching  up.  However,  price  dispersion  upward  trends  rather 
indicate  possible  persisting  intra-EU  barriers  to  the  trade  in  services.  Whereas  the 
differences  in  the  level  of  dispersion  are  to  large  extent  natural  and  result  from  much 
lower  transportability,  tradability8  and  heterogeneity  of  services,  the  differences  in  the 
trends  between  services  and  goods,  in  which  the  dispersion  declined,  may  point  to  an 
insufficient  level  of  competition  in  that  sector  (Chart  4).  The  more  significant  price 
dispersion trends have been noticed in the oldest Member States of the EU. 

Chart 3. Evolution of intra-EU trade in services 

Data source: Eurostat 

7 There is indeed a high positive correlation (0.8) between the  EU trade and extra-EU trade (measured as annual 
average change in percentage points of GDP) across the Member States 
8  However,  the  tradability  of  services  is  increasing  thanks  to  the  rapid  development  of  the  information  and 
communication technologies (ICT). 

4 

 
 
 
 
 
 
 
 
                                                            
Chart 4. Dispersion of prices across the EU Member States 

Data source: Eurostat 

•  Because  of  the  mentioned  non-tradability  of  many  services,  the  services  market 
predominantly  integrates  through  the  establishment  of  companies.  The  data  on  foreign 
control of enterprises9 shows that the degree of integration of services in almost all the 
Member  States  was  lower  than  that  of  other  sectors  (Chart 5).  Similarly  to  the  trade 
openness  indicators,  smaller  economies  were  more  open,  with  the  exception  of  CY,  SI, 
and  PT,  which  are  the  most  closed  overall  despite  their  sizes.  IT  is  the  least  integrated 
among  the  large  economies  from  the  perspective  of  the  data  on  the  foreign  control  of 
enterprises. 

Chart 5: Intra-EU establishment levels in services and in other sectors 

Data source: Eurostat 

•  The Commission's annual Consumer Markets Scoreboards indicate that the assessment of 
market performance by European consumers is usually higher for markets that are 
more integrated10. The graph below shows that consumer assessment is lower in the less 
integrated services markets than in the goods market in almost all Member States. 

9 Eurostat Foreign AffiliaTes Statistics (FATS). The data is currently available until 2009. 
10 8th Consumer Markets Scoreboard, 2012, Commission, DG SANCO.. This assessment is supported by the high 
negative  correlation  between  the  EU  average  levels  of  consumer  assessment  of  market  performance  and  the 
5 

 
 
 
 
 
                                                            
Chart 6. Performance of goods and services markets as assessed by consumers 

Source: Market monitoring survey 2012 (Commission, DG SANCO) 

1.1.3. 

Capital  

• 

Intra-EU investment is a key factor of integration through which companies establish their 
operations  in  other  Member  States.  Cross-border  investment  is  also  one  of  the  main 
modalities through which innovations are disseminated throughout the Single Market. 

•  After a long period of growth cross-border investment has collapsed with the financial 

crises and, contrary to cross-border trade, has not fully recovered since. 

Chart 7. Evolution of intra-EU foreign direct investment (FDI) 

Data source: Eurostat 

•  Similar  negative  integration  dynamics  are  noticeable  on  the  financial  markets.  The 
crisis has significantly amplified market volatility, and indicators of financial integration 
reflect  that  volatility  since  2007.  The  financial  system,  and  the  banking  sector  in 
particular,  have  started  undergoing  a  process  of  restructuring  in  several  countries.  The 
possibility of national solutions implying a retrenchment of banks behind national borders 
cannot be excluded. This would, however, partly undo the significant benefits of European 

dispersion  of  this  indicator  across  the  internal  market.  The  dispersion  is  a  proxy  for  integration  since  more 
integrated markets are expected to exhibit more similar levels of consumer assessment. The average level and the 
dispersion  (variance)  are  calculated  for  several  goods  and  services  sector  (i.e.  across  the  Member  States).  The 
negative correlation between the dispersions and the average levels is then observed across the sectors. 

6 

 
 
 
 
 
 
 
 
 
                                                                                                                                                                                          
financial integration and endanger economic integration at large. Much can be gained if 
the changes are properly coordinated and encompassed in the new supervisory and 
regulatory frameworks developed at EU level. 

1.1.4.  Labour  

•  Although  the  number  of  EU  nationals  working  in  another  Member  State  is  growing, 
labour  mobility  across  Europe  is  too  low  compared  to  the  EU  potential  and  not 
commensurate  to  what  could  be  expected  within  a  genuine  single  labour  market.  EU 
citizens economically active in another EU country represent only 3.1% of the EU labour 
force and the size of the annual increases is only around 0.1%. 

• 

International comparisons11 also indicate that cross-border mobility between EU Member 
States is limited compared to other regions (such as United States, Canada or Australia). 
Although  this  can  be  partly  explained  by  the  very  large  linguistic  diversity  and  various 
institutional frameworks, these comparisons still suggest that more scope exists for higher 
geographical mobility in the EU.  

•  According to a Eurobarometer study12, 28% of working-age EU citizens would consider 
working  in  another  EU  country  while  15%  would  not  consider  moving  because  of  too 
many obstacles. More than half of Europeans consider language and family considerations 
as  main  obstacles  to  European  citizens'  mobility.  Nevertheless,  administrative  barriers 
such  as  red  tape,  recognition  of  qualifications  and  social  security  are  also  quoted  as 
reasons for people opting not to work in another EU Member State. Obstacles to labour 
mobility can also be caused by certain supplementary pension scheme rules, tax obstacles 
when moving to another Member States (obtaining allowances, tax relief, double taxation 
or  higher  progressive  tax  rates  applied  to  non-residents)  and  the  lack  of  awareness  of 
many mobile workers of their rights and obligations. 

•  A  recent  Commission  report13  also  stressed  the  importance  of  macroeconomic  drivers 
of  mobility  such  as  the  relative  income  level  differences,  as  evidenced  by  the  poorest 
Member States having seen the largest net outflows of migrants; the role of this factor is 
expected to decline along with the progress of catching-up. The long-term differences in 
the  levels  of  unemployment  are  other,  though  less  evident,  macroeconomic  drivers. 
Besides,  the  report  also  highlighted  social  and  cultural  factors  e.g.  migrant  community 
networks influencing migration patterns. 

2. 

• 

TRIGGERS FOR GROWTH AND JOBS IN THE SINGLE MARKET  

In its Communication on better governance for the Single Market adopted in June 201214 
the  Commission  recommends  taking  steps  to  unlock  the  Single  Market  potential  in 
areas where such potential is the greatest. Based on a number of economic indicators, 

11 See for instance OECD, Economic survey of the EU, 2012 
12 Special Eurobarometer 363, http://ec.europa.eu/public_opinion/archives/ebs/ebs_363_en.pdf 
13  European  Commission  (DG  EMPL),  “Employment  and  Social  Developments  in  Europe  2011”,  December 
2011. http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=6176&type=2&furtherPubs=no 
14 European Commission Communication "Better Governance for the Single Market", COM(2012)259 final 

7 

 
 
 
 
 
 
 
 
 
                                                            
services,  financial  services15,  transport,  digital  market  and  energy  have  been 
identified  as  key  areas  for  priority  policy  action  and  enhanced  implementation  of  the 
Single Market16.  

• 

In  parallel,  it  is  also  important  to  improve  the  functioning  of  the  internal  market  for 
industrial  products,  inter  alia  by  identifying  gaps  and  barriers  still  blocking  the  free 
circulation of products and enhancing the quality and efficiency of product legislation. In 
addition  the  application  of  "mutual  recognition"  in  the  single  market  for  goods  must  be 
monitored closely17.  

•  The June Communication on better governance for the Single Market points at the 
need  to  have  the  Single  Market  rules  properly  transposed,  implemented  and 
enforced  in  order  to  deliver  its  full  potential.  It  therefore  sets  ambitious  targets  for 
transposing and complying with EU legislation, in particular,  but not exclusively, in the 
above key areas. The recent Internal Market Scoreboard shows some progress in particular 
with  respect  to  the  compliance  deficit18.  However,  the  number  of  directives  for  which 
transposition is overdue by two years or more has increased.  

•  Regarding  the  key  areas,  the  June  Communication  calls  for  a  zero  tolerance  approach 
when it comes to transposing and implementing rules. It pleads for fast-track infringement 
procedures  where  problems  remain.  As  the  table  in  the  Annex  shows,  we  are  not  yet 
there. Only one Member State (DK) already complies with all the targets set in the June 
2012 Communication, while more than half of the Member States have not reached more 
than three targets. The longest delays regarding transposition can be noted in energy 
while  transport  is  an  area  where  targets  are  missed  almost  systematically  by  most 
Member States. 

•  Member States should step up efforts to ensure that individuals and businesses can make 
effective  use  of  their  single  market  rights,  by  guaranteeing  an  effective  application  and 
enforcement  of  Single  Market  legislation  by  the  national  courts,  and  by  offering  good 
quality  information,  e-government  tools  and  procedures  and  by  investing  in 
mechanisms to rapidly resolve problems. Much remains to be done in this area19. For 
instance,  the  potential  of  SOLVIT  remains  under-used  as  a  key  problem-solving  tool  at 
national  level  (about  1300  cases  a  year),  partly  due  to  insufficient  staffing  in  various 
SOLVIT centres.  

on 

the 

First 

Report 

15  Financial  services  sector  is  not  reviewed  in  the  present  report.  However,  part  of  the  relevant  legislation 
selected in this sector included in the June Communication is taken into consideration in the annex. 
16  The  methodology  and  criteria  for  defining  the  key  areas  are  presented  in  the  annex  to  the  Commission 
Communication "Better Governance for the Single Market", COM(2012)259 final 
17 
http://ec.europa.eu/economy_finance/publications/economic_paper/2012/ecp456_en.htm 
18  The  transposition  deficit  (percentage  of  Internal  Market  directives  not  yet  notified  to  the  Commission  in 
relation  to  the  total  number  of  directives  that  should  have  been  notified  by  the  deadline)  has  decreased  from 
1.2% in November 2011 to 0.9% in May 2012; the compliance deficit (number of directives transposed where an 
infringement proceeding for non-conformity has been initiated by the Commission) has decreased from 0.8% in 
November  2011  to  0.7%  in  May  2012  (source:  Internal  Market  Scoreboard  nº  25,  September  2012 
http://ec.europa.eu/internal_market/score/docs/score25_en.pdf). 
19  Annual  governance  check-up  2011 
the 
"Making 
http://ec.europa.eu/internal_market/score/docs/relateddocs/single_market_governance_report_2011_en.pdf 

single  market  deliver",  February  2012, 

the  Mutual 

Recognition 

application 

Regulation 

of 

8 

 
 
 
 
 
 
 
                                                            
•  The  June  Communication  also  calls  for  swift  delivery  on  the  key  actions  to  boost 

growth and confidence included in the Single Market Act20.  

2.1. 

The services markets 

Market performance and obstacles to EU integration  

•  The Services Directive is the cornerstone of Single Market integration in the services 
area. A recent study21 estimates that additional gains from the Services Directive could be 
made if Member States were to increase their level of ambition in the implementation 
of  the  Directive.  Indeed  under  an  ambitious  scenario,  in  which  all  Member  States 
approached  the  average  level  of  the  five  best  countries22  in  terms  of  barriers  per  sector 
(which is close to the elimination of all restrictions covered by the Services Directive) the 
economic impact could reach a 2.6% increase in GDP23. To reap the growth potential 
of the Services Directive by 2015 the Commission presented an action plan in June this 
year24. 

The Services Directive contains some important, unequivocal obligations25 with which 
close to half of Member States still do not comply. For instance, some of them still have 
restrictions based on the nationality or the residence of the service provider (eg. MT and 
SE for patent agents, IT, CY and PL for some services in the tourism sector). 

Regarding  the  application  of  the  freedom  to  provide  services  clause  of  the  Services 
Directive,  Member  States  have  mostly  taken  a  conservative  approach,  and  continue  to 
treat  cross-border  service  providers  in  the  same  way  as  established  ones,  thus  exposing 
them to unjustified double regulation as they need to comply with both home and host 
country  rules  for  instance  in  relation  to  professional  insurance.  Moreover,  in  several 
Member  States  there  is  uncertainty  about  which  rules  apply  to  service  providers 
wishing  to  provide  cross-border  services  on  a  temporary  basis  as  opposed  to  service 
providers wishing to establish themselves (e.g. BG, FI, IE, IT, LV, PL, RO, SI, SE). This 
uncertainty  can  result  in  temporary  service  provision  being  treated  as  if  it  were 
establishment,  thus  imposing  on  providers  a  double  regulatory  burden,  which  equally 
hampers the cross-border provision of services. 

•  Services sectors include many professions that are regulated at national level. These 
regulations  take  the  form  of  entry  barriers  (e.g.  requirements  reserving  the  exercise  of 
certain  activities  to  the  holders  of  specific  qualifications)  and/or  conduct  barriers  (i.e. 
restrictions to the exercise of professional activities such as requirements on companies' 
legal  forms  and  capital  ownership).  In  some  Member  States  (BG,  CY,  DE,  PL,  SK,  SI, 

20  European  Commission  Communication:  "Single  Market  Act.  Twelve  levers  to  boost  growth  and  strengthen 
confidence. Working together to create new growth", COM(2011)206 final. 
21 http://ec.europa.eu/economy_finance/publications/economic_paper/2012/ecp456_en.htm 
22 The countries which re-appear most frequently in the groups of sector-specific “best five” countries covered 
by the analysis are: Slovakia, the UK, DK, IE, FI and ES  
23  Calculated  as  an  additional  1.8%  of  GDP  on  top  of  the  effects  of  already  implemented  barrier  reductions 
estimated at 0.8% of GDP 
24  European  Commission  Communication  on  the  implementation  of  the  Services  Directive  "A  partnership  for 
new growth in services 2012-2015", COM(2012) 261 final 
25 These unequivocal obligations are listed in the European Commission Communication on the implementation 
of the Services Directive. "A partnership for new growth in services 2012-2015", COM(2012) 261 final 

9 

 
 
 
 
 
 
 
 
                                                            
SE),  there  are  also  remaining  requirements  fixing  tariffs  for  certain  professions  (e.g. 
engineers/architects, accountants, tax and patent advisors or veterinarians). 

Whilst  the  regulation  of  professions  may  be  justified  by  public  interests,  it  is  highly 
heterogeneous across the EU: the number of regulated professions in each Member State 
varies between 47 and 368. Moreover, there are significant differences in the scope of 
reserved  activities26  and  in  the  level  of  qualifications  required.  In  this  context, 
country-specific  recommendations  (CSRs)  have  already  been  addressed  to  eight 
Member  States  in  2012  (AT,  CY,  FR,  DE,  IT,  PL,  SI,  ES)  on  the  need  to  reduce 
regulatory barriers in professional services. Some Member States (notably PL, PT, IT, 
ES,  CZ)  have  initiated  reforms  in  this  area,  with  the  objective  to  foster  competition, 
simplify  the  business  environment  or  reduce  unemployment,  in  particular  among  young 
people. 

•  Effective governance tools are paramount to fully realising the integration potential of 
Single Market legislation in general and the Services Directive in particular. The Points 
of  Single  Contact  (PSCs)  and  the  Internal  Market  Information  (IMI)  system  are 
among these important tools.  

The situation as regards PSCs is very diverse among Member States. DK, EE, ES, LU, 
NL,  SE,  UK  and  LT  have  the  most  advanced  PSCs  whilst,  in  BG,  EL,  IE,  RO  and  SI 
development is substantially lagging behind. In particular, there are large variations in the 
level  of  detail  and  user-friendliness  of  the  information  provided  by  the  PSCs  on  the 
national rules for the main service sectors. Moreover, many administrative procedures can 
still not be completed online or by cross-border users.  

The  overall  number  of  IMI  information  exchanges  on  services  remains  low.  Nearly 
half  of  all  exchanges  were  initiated  by  DE,  which  also  has  the  highest  number  of 
authorities registered in IMI for services. BE, DK, EE, FI, IE, NL, RO and UK have not 
yet sent any requests in 2012. On the receiving end, PL, HU and UK have dealt with the 
most incoming requests for information.  

•  Among the services markets the sectors which have the most significant economic weight 
in  terms  of  GDP  and  employment  and  above  average  growth  potential  are:  business 
services  (11.7%  of  EU  value  added  in  2009),  retail  and  wholesale  trade  (11.1%)  and 
construction (6.3%).  

• 

In  many  Member  States,  the  business  services  sector  is  still  characterised  by  heavy 
regulation.  For  instance,  requirements  limiting  the  free  choice  of  company  form  and 
prescribing some kind of capital ownership can be an obstacle to the development of 
cross-border professional services. Some of such barriers have been made less stringent 
since the entry into force of the Services Directive (in PL, DE, FR, CY and IT), but others 
have not been affected (notably in AT, BE, BG, CZ, DK, FR, DE, IT, MT, PL, PT, RO, 
SK, SI and UK, the legal profession seems to be the most affected). 

26  "Reserved  activities"  are  economic  activities  reserved  to  the  holders  of  specific  professional  qualifications, 
who benefit from exclusive rights to exercise these activities and offer the related services. 

10 

 
 
 
 
 
 
 
 
 
                                                            
•  The  European  retail  and  wholesale  sectors  are  characterised  by  unequal  levels  of 
economic maturity and saturation of many markets. Competition in retail is hindered by 
remaining  barriers  such  as  burdensome  legislation,  which  may  have  protectionist 
motivations, or disproportionate restrictions imposed on store formats. The 2012 country-
specific  recommendations  have  stressed  the  need  to  eliminate  restrictions  in  the  retail 
sector (BE, FR, HU, ES). Some Member States (ES) have already initiated reforms in this 
area. CSRs 2012 have also stressed more generally the need to strengthen competition in 
the retail sector (BE, DK, FI).  

Some  Member  States  require  businesses  to  meet  an  “economic  needs  test”.  These  are 
tests that make the granting of an authorisation subject to (1) proof of the existence of an 
economic need or market demand, (2) an assessment of the potential or current economic 
effects of the activity (for example on established providers), or 3) an assessment of the 
appropriateness of the activity in relation to the planning objectives set by the competent 
authority  as  a  pre-condition  for  establishment.  These  tests  leave  room  for  arbitrary 
decisions,  unjustified  restrictions  and  generate  significant  costs  for  business.  Such 
requirements are prohibited under the Services Directive but are nevertheless still in place 
in RO, AT, EL, NL, HU and in certain regions of DE and ES. 

Retail  performance  may  also  be  affected  by barriers to cross-border supply of goods. 
Retailers are not always free to source their goods at best prices all across Europe. There 
are indications of territorial supply constraints that prevent lower prices in some national 
markets (LU and BE), especially in the case of branded products. 

•  The  development  of  a  dynamic  construction  sector  within  EU  borders  is  affected  by 
businesses and professionals facing obstacles because of the lack of mutual recognition 
of authorisation schemes or the certification of experts providing specialised services e.g. 
in  the  area  of  environmental  certification  of  buildings.  For  example,  regarding 
authorisation  procedures  for  energy  efficiency  certification  providers,  cross-border 
provision of services does not seem possible in BE, CY, LV, LT and MT. 

•  Public  procurement  is  an  important  market  for  the  service  industry  –  in  2010,  business 
opportunities  in  procurement  covered  by  the  EU  rules  amounted  to  around  EUR  447 
billion27 (3.7% of EU GDP), with service contracts accounting for about 42% of this total. 
However,  only  3.5%  of  procurement  contracts  above  the  EU  thresholds  are  awarded 
cross-border28  (in  services  this  proportion  is  even  lower  i.e.  2%)  and  obstacles  to 
integrated public procurement market remain. Better implementation of procurement 
rules in Member States could deliver significant efficiency gains. CSRs were addressed to 
5 Member States in 2012 (BG, CZ, DK, HU and SK). 

•  Given  the  importance  of  public  procurement,  it  is  of  particular  concern  that  public 
authorities remain the worst payers in the European Union. The amount of written off debt 
in  Europe  has  grown  in  2012  to  2.8%  of  total  receivables  to  the  unprecedented  level  of 
€340  billion.  The  difference  between  northern  a nd  southern  Member  States  is  severely 

27 http://ec.europa.eu/internal_market/publicprocurement/docs/indicators2010_en.pdf 
28 
"Cross-border 
http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/cross-border-
procurement_en.pdf 

procurement 

above 

Study 

on 

EU 

thresholds" 

11 

 
 
 
 
 
 
 
                                                            
hampering  the  integration  of  the  EU's  single  market29.  The  2011  Late  Payment 
Directive30, if properly implemented, will unlock €180  billion per year due the obligation 
for  public  authorities  to  pay within  30  days,  thereby  greatly  improving  the  cash  flow  of 
businesses and helping them to overcome the economic crisis. 

•  From a consumer perspective, retail banking services remain the worst performing group 
of  markets,  notably  on  comparability  of  fees  and  conditions  offered,  choosing  the  best 
deal  or  switching  to  another  provider31.  A  robust  EU  framework32  ensuring  consumer 
information, rights, means of redress and facilitating access to basic banking services will 
enable  greater  participation  by  all  consumers,  especially  the  vulnerable,  in  the  retail 
banking sector. 

Policy priorities  

•  Member States should focus on the following key priorities 

o  Make their legislation fully compatible with the Services Directive, in particular by 

complying with all its unequivocal obligations. 

o  Adopt a more ambitious approach in the implementation of the Services Directive 

by:  
- 

reviewing  the  necessity  and  proportionality  of  remaining  requirements  in 
particular  those  fixing  tariffs  for  certain  professions  and  those  limiting 
company structures and capital ownership. 

-  conducting  a  review  of  the  application  of  the  freedom  to  provide  services 
clause in the key sectors i.e. construction, business services and tourism. 

Such a review should take the form of a systematic peer review process assisted by the 
Commission  and  aiming  at  removing  remaining  unnecessary,  unjustified  and 
disproportional restrictions.  

o  Assess  the  justification  of  the  requirements  limiting  both  the  access  and  the 
conduct  of  regulated  professions,  including  the  role  of  professional  bodies,  and 
remove or relax these requirements where they are unjustified. Such assessments 
should also include a review of the criteria for introducing new regulated professions. 

o  Strengthen  competition  in  the  retail  sector  by  lowering  barriers  and  reducing 
operational  restrictions.  In  particular,  remaining  economic  needs  tests  should  be 
systematically abolished. 

29  It  takes  an  average  of  91  days  for  B2B  transactions  to  be  paid  in  the  southern  region,  as  compared  to  an 
average of 31 days in the north 
30 Directive 2011/7/EU of 16 February 2011 on combating late payment in commercial transactions. 
31 8th Consumer Market Scoreboard, 2012, Commission, DG SANCO. 
32  This  includes  the  proper  implementation  of  the  2008  Consumer  Credit  Directive  and  the  forthcoming 
legislative  initiative  on  transparency  and  comparability  of  bank  account  fees,  switching  of  bank  accounts  and 
access to a basic payment account. 

12 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
o  Improve the Points of Single Contact to become fully-fledged e-government tools 
responding adequately to the needs of service providers and recipients. In particular, in 
order  to  improve  their  user-friendliness,  the  objective  should  be  that  the  Points  of 
Single Contact cover all procedures during the business life cycle and are multilingual. 

o  Transpose  as  early  as  possible  the  Late  Payment  Directive  (the  transposition 

deadline for Member States is 16 March 2013). 

2.2. 

The energy markets  

Market performance and obstacles to EU integration 

•  The  GDP  share  of  the  energy  sector  in  the  EU  has  been  increasing  since  2000  and  has 
exceeded  2½%  in  recent  years.33  However,  this  indicator  does  not  fully  reflect  the 
importance of this sector in the economy, which provides critical production inputs for 
all other sectors thus contributing significantly to their cost competitiveness. 

•  The  internal  energy  market  slowly  but  surely  starts  to  bear  fruit34.  Wholesale 
electricity prices in the EU have increased less than global primary energy prices and less 
than inflation. Wholesale gas prices have been noticeably lower in those Member States 
where markets work better. Gas supplies to retail consumers have been more resilient to 
temporary volume reductions by exporting countries thanks to more flexible infrastructure 
and clear price signals inside the EU. 

•  However,  we  are  not  there  yet.  The  energy  services  (both  gas  and  electricity) 
performed  below  the  average  in  the  most  recent  Consumer  Markets  Scoreboard, 
with  electricity  supply  being  among  the  5  worst  performing  sectors  (out  of  30)35.  In 
addition, energy markets are generally perceived not to be transparent or sufficiently open 
for newcomers36. 

•  The lack of integration of the energy market is also illustrated by the fact that there is little 
convergence in retail prices for electricity and gas across the EU, with the price paid 
in  the  most  expensive  Member  State  representing  several  times  the  price  paid  in  the 
cheapest. This is due to a number of reasons: price regulation in several Member States 
(BG,  CY,  DK,  EE,  FR,  EL,  HU,  LT,  MT,  PL,  PT,  RO,  SK,  ES),  a  lack  of  diversity  of 
supply,  limited  cross-border  interconnection,  differences  in  network  costs,  taxation  and 
labour costs. Regulated prices fail to create a competitive environment in which the right 
type of investments take place. Instead, they are perceived by investors as an indicator of 
political interference which stifles investment. Moreover, prices regulated at a level below 
the market price can lead to tariffs that are economically unsustainable for suppliers, the 
cost of which is ultimately borne by consumers as a whole. In addition, regulated prices 
also fail to provide incentives for energy efficiency.  

33 Here the sector is approximated as NACE Rev. 1 “E: Electricity, gas and water supply”. 
34 On 15 November 2012, the European Commission presented a Communication assessing the state of play of 
the internal energy market, "Making the internal energy market work", COM (2012)663 
358th Consumer Markets Scoreboard, 2012, European Commission, DG SANCO 
36 European Commission Communication "Making the internal energy market work", COM(2012)663 

13 

 
 
 
 
 
 
 
 
 
 
                                                            
Member States have a diverging level of retail competition, the main market concentration 
indicator  (HHI37)  is  very  high  (above  5000)  in  EL,  PT,  EE,  LT,  LV,  IT  and  FR.  In 
Southern  and  Eastern  countries  switching  rates  are  very  low.  In  general,  consumer 
assessment  of  electricity  markets  is  low  even  in  those  Member  States  that  have  fairly 
liberalised energy markets, due to perceived lack of transparency and low satisfaction with 
customer service38.  

•  As  regards  wholesale  markets,  price  convergence  is  greater  than  in  retail  markets. 
Power market liquidity has increased in recent years, which has a positive impact on the 
functioning  of  the  European  wholesale  electricity  market  and  on  competition.  Market 
integration has also been strengthened by increasing market coupling39 (17 Member States 
have the system in place). The lack of market coupling prevents prices acting as effective 
signals for the direction of power flows between markets. This increased integration could 
explain  why  wholesale  electricity  prices  in  the  EU  did  not  follow  the  sharp  increase  in 
fossil fuel prices in the recent years. 

•  Considerable investment in energy infrastructure, such as transmission pipelines and 
electricity networks, storage and LNG projects is still needed to complete the internal 
gas  and  electricity  markets  and  to  address  the  security  of  supply.  To  this  end,  in  2012 
CSRs have been addressed to 11 Member States (BG, DE, EE, ES, FR, HU, IT, LT, LV, 
MT and PL) regarding the need to increase electricity and/or gas interconnections. With 
electricity, the need for investment in generation reflects increasing demand for electricity 
and  the  binding  renewables  targets  for  2020.  Optimal  use  of  renewables  requires 
sufficient interconnection and smarter grids, including storage capacities and back-
up  generation  infrastructure.  Obstacles  to  investment  relate  to  permit  granting 
procedures in Member States, financing and regulatory framework. The Commission has 
launched  a  public  consultation  in  November  on  security  of  supply  in  electricity  and 
generation adequacy.  

•  The  Third  energy  package40  is  the  cornerstone  of  the  integration  of  the  gas  and 
electricity market. However there are delays in its transposition and enforcement. As 
of  25  October  2012,  several  Member  States  have  not  yet  communicated  full 
transposition of one or both of the Third energy package Directives. An examination 
of the measures notified by the Member States that have communicated full transposition 
has  also  been  carried  out  and  action  will  be  taken  in  the  case  that  transposition  is 
considered  incomplete.  Further  information  is  provided  in  the  Annex.  The  smooth 
implementation of the legislation is encountering difficulties in a number of sensitive 
areas  i.e.:  (i)  the  unbundling  of  transmission  networks,  (ii)  consumer  protection  issues 
(including the effective protection of vulnerable customers) and (iii) the independence and 

37  The  HHI  (Herfindahl-Hirschman  Index)  is  a  commonly  accepted  measure  of  market  concentration.  It  is 
calculated by squaring the market share of each firm competing in the market and then summing the resulting 
numbers  (the  higher  the  index,  the  more  concentrated  the  market).  Moderate  concentration:  750–1800;  high 
concentration: 1800–5000; very high concentration: above 5000. For more information, please see Commission 
Staff Working Document "Energy Markets in the European Union in 2011" SWD (2012) 368, part 2 
38 “The functioning of retail electricity markets for consumers in the European Union”, Study on behalf of the 
European Commission, DG SANCO, 2010. 
39 Market coupling optimises interconnection capacity and ensures that electricity flows from low price to high 
price areas by the automatic linking of supply and demand on either side of a border. 
40 Directives 2009/72/EC and 2009/73/EC 

14 

 
 
 
 
 
                                                            
powers  of  the  national  regulatory  authorities  (NRAs)  given  that  the  independence 
requirements of the Directives are very strict.  

•  The swift adoption and implementation of the Energy Infrastructure Package41 and 
adoption  of  the  first  Union-wide  list  of  Projects  of  Common  Interest  in  energy 
infrastructure are of central importance for a future secure and affordable energy supply. 

•  As regards energy efficiency, the greatest energy saving potential lies in buildings, which 
have  a  40%  share  in  the  European  Union's  total  energy  consumption.  Reducing  energy 
consumption in this area is therefore a priority under the energy efficiency part of the “20-
20-20” climate and energy targets, as well as under the building milestone of the Roadmap 
for  a  Resource  efficient  Europe42.  The  timely  and  adequate  transposition  and  swift 
implementation on the ground of key legislation in this area is important in making these 
objectives a reality. The construction sector also has an important role to play in achieving 
these targets. New technologies offer a big potential, not only for new houses, but also for 
renovating millions of existing buildings to make them highly energy efficient.  

Policy priorities  

• 

In order to achieve integrated and well-functioning energy markets, Member States should 
focus on the following key priorities: 

o  Timely  and  comprehensive  transposition  of  the  third  energy  package  directives 
and  proper  application  of  the  third  energy  package  regulations  if  they  have  not 
done  so  yet  so  as  to  fully  reap  the  benefits  for  European  consumers  and  businesses. 
Transpose  and  Implement  the  key  legislation  in  the  field  of  energy  efficiency,  in 
particular the Energy Efficiency Directive. 

o  Undertake an analysis of whether there is a lack of investment in generation, and 
why generation and consumption patterns are changing fundamentally. Member States 
should  seek  cross-border  solutions  to  any  problems  they  find  before  planning  to 
intervene to avoid fragmentation of the internal energy market.  

o  Empowering  consumers  by  enabling  them  to  make  informed  choices  and 

increasing the incentives for energy-efficient behaviour. 

o  Gradually  phasing  out  regulated  prices  while  ensuring  robust  competition  and 
strengthening the protection of vulnerable consumers. Phasing out regulated prices 
would send the correct price signals needed to secure enough investment and enhance 
energy efficiency. In the longer run, this would provide consumers with more choice 
and sustainable market prices. 

41  Proposal  for  a  Regulation  on  guidelines  for  trans-European  energy  infrastructure  COM/2011/658,  and 
the  Connecting  Europe  Facility  covering  Energy,  Transport  and 
Proposal 
Telecommunication infrastructure (2014-2020), COM(2011)665 
42 European Commission Communication "Roadmap to a Resource Efficient Europe", COM(2011)571 final 

for  a  Regulation  on 

15 

 
 
 
 
 
 
 
 
 
 
                                                            
o  Sector  specific  legislation  and  regulation  need  to  be  complemented  by  continued 
enforcement  of  competition  rules  in  the  energy  sector  in  order  to  create  more 
competitve and efficient energy markets. 

2.3. 

The transport markets 

Market performance and obstacles to EU integration 

•  The transport sector represents a key area for growth and competitiveness, not only due 
to its size (accounting for about 5% of EU total value added), but also due to its function 
in servicing the other sectors of the economy. Efficient and sustainable transport services, 
adequate  infrastructures  and  modern  technologies  are  a  precondition  for  a  well-
functioning internal market and key to exploiting the strength of all regions.  

•  As a result of delayed action, transport, and more particularly some transport modes, are 
lagging  behind  other  sectors  in  terms  of  market  opening  and  overall  performance. 
Not only is the extent of market opening heterogeneous across different transport modes 
(air,  rail,  road  and  sea),  but  also  the  achievement  of  a  true  internal  market  for  transport 
services is still incomplete, and inadequate to cope with the evolving demand.  

•  Lack  of  integration  is  partly  due  to  difficulties  in  adequate  and  timely  transposition 
and implementation of the key legislation in this field (see the Annex), in particular in 
the area of road and railway transport and maritime safety. Application of internal market 
principles  in  the  port  sector,  in  particular  restrictions  to  the  freedom  of  establishment  in 
ports,  is  also  the  object  of  much  attention.  In  aviation,  access  to  the  ground  handling 
market continues to pose problems in several Member States. The infringements relate in 
particular to market access difficulties for new entrants and to the tender procedures for 
the selection of providers which are not considered to be in line with EU law. This results 
in  heterogeneous  EU  consumer  assessment,43  with  the  airline  services  taking  5th  (out  of 
30) place in the 2012 ranking of the service markets, whereas the railway services occupy 
only 27th position.  

•  The heterogeneous state of play in terms of market opening and competition is mirrored 
in  the  2012  CSRs,  namely  recommendations  to  foster  competition  and  facilitate  market 
entry of new operators have been addressed to those Member States that are key players in 
the EU transport network (AT, BE, FR, DE and IT), while recommendations to strengthen 
administrative capacity and market regulation in the transport sector have been addressed 
to  BG  and  PL.  More  generally,  in  several  Member  States  there  are  still  barriers  to 
market entry and regulatory burden in transport markets, in particular in large and/or 
transit countries (DE, FR, IT, ES, and AT) which puts a brake on the EU economy, as a 
whole. 

•  The  area  where  bottlenecks  are  still  most  evident  is  the  internal  market  for  rail 
services. Whereas markets for rail freight services have been fully opened to competition 
since 2007 and those for  international passenger  transport  services  as  of  2010,  domestic 
passenger  transport  remains  largely  closed  to  competition.  Besides,  the  lack  of 

43 8th Consumer Markets Scoreboard, 2012, Commission, DG SANCO. These findings are also confirmed by the 
World Bank's Logistics Performance Index. 

16 

 
 
 
 
 
 
 
 
 
                                                            
competition to incumbent operators, which often enjoy a de facto monopoly situation on 
the national market, is one of the reasons explaining the low quality and efficiency of rail 
services, which is also reflected in very low consumer assessment of the market.  

•  Despite EU legislation granting access to rail freight and international passenger transport 
services markets, difficulties in the entry of new operators still persist, particularly in 
FR  and  in  IT,  while  in  DE  the  institutional  set-up  does  not  guarantee  effective 
competition.  The  market  opening  process  is  most  advanced  in  DK,  SE,  UK,  which  all 
enjoyed a  rising market share for rail. SE and the UK are also the only Member States, 
together  with  DE,  to  award  all  public  service  contracts  on  the  basis  of  competitive 
tendering.  

•  The provision of port services is still fragmented. For EU companies, port and terminal 
costs may represent up to 25% of the total door-to-door logistic cost. In countries like DE, 
the  NL,  FI  or  DK,  ports  contribute  significantly  to  the  overall  logistic  performance  of 
the  country  in  terms  of  time,  cost,  and  reliability44.  On  the  other  hand,  poor 
connectivity, red tape and market entry barriers for private sector involvement - technical-
nautical  and  cargo-handling  services  are  often  restricted  to  monopolies  or  to  a  few 
established operators - act as trade barriers in other European ports, in particular, in the 
Mediterranean, Black and Baltic Sea regions.  

• 

In  contrast  to  other  transport  modes,  short  sea  shipping  between  Member  State  ports  is 
often  still  considered  as  going  beyond  the  external  borders  of  the  internal  market,  thus 
requiring  extensive  administrative  procedures.  Also,  fair  competition  between  ports 
calls for a level-playing field: information on funds that public authorities make available 
to any port should be transparent, as well as the conditions under which port authorities 
grant market access to service providers. 

•  So far, market opening has been very successful in aviation, where liberalisation in the 
1990s  led  to  an  unprecedented  growth  in  both  the  number  of  passengers  flown  and  the 
number  of  routes  served  inside  the  EU,  along  with  a  significant  decrease  in  airfares. 
However,  Europe's  airspace  is  still  fragmented,  which  brings  extra  costs  to  both  airline 
companies  and  customers,  and  is  a  source  of  economic  inefficiency.  In  this  respect,  the 
completion of the Single European Sky is one of the key elements for achieving a single 
European transport area. In particular, the creation of genuine Functional Airspace Blocks 
would defragment Europe’s airspace and optimise its air navigation service provision very 
significantly.  Besides,  consolidation  of  supply,  if  fully  compliant  with  competition  rules 
and principles applicable to merger and alliances, can contribute to increasing economic 
efficiency of the airline sector. 

•  Market  opening  has  been  very  successful 

international  road  transport. 
International  road  haulage  increased  by  35%  in  2000–2010  (compared  to  8%  growth  in 
the national haulage market). However, a number of significant cabotage45 restrictions 
remain and prevent an optimal matching of transport supply and demand.  

in 

44 World Bank - Logistic Performance Index, Connecting to Compete (2012). 
45 Transport of goods and passengers between two points in the same country by a vehicle registered in another 
country. 

17 

 
 
 
 
 
 
 
 
                                                            
•  The  inland  waterway  transport  market  has  been  liberalised  since  the  1990s. 
Competition  on  the  inland  waterways  has  intensified  and  the  freight  prices 
decreased. However, barriers still remain with respect to access to the profession. 

Policy priorities 

• 

In order to remove those bottlenecks that prevent the completion of a true internal market 
for transport, Member States should focus on the following key priorities: 

o  Ensure  a  timely  and  high-quality  transposition  of  the  transport  acquis,  in 

particular in the area of road, railways and maritime safety. 

o  Open  domestic  rail  passenger  services  to  competition  and  ensure  that  the 
institutional  set-up  allows  effective  competition  in  railway  markets  ensuring  equal 
access to infrastructure.  

o  Remove red tape and market entry barriers in the port services sector (especially in 

the case of Mediterranean, Black and Baltic Sea regions). 

o  Accelerate the implementation of the Single European Sky (e.g. progressing in the 
implementation of Functional Air Blocks) to improve safety, capacity, efficiency and 
the environmental impact of aviation. 

o  Allow more cabotage opportunities for foreign road hauliers. 

2.4. The digital markets 

Market performance and obstacles to EU integration  

• 

Internet, and in particular broadband Internet, provides the platform for the huge growth 
potential of applications such as eCommerce and cloud computing: a 10 percentage points 
increase in high-speed Internet is estimated to lead to an annual growth in per capita GDP 
of some 1-1.5percentage points46.  

•  The continued growth in broadband has been possible in particular thanks to increasing 
levels  of  competition  brought  about  by  the  implementation  of  the  EU  regulatory 
framework  for  electronic  communications,  with  a  corresponding  reduction  in  the  retail 
prices of services. The new operators sold two thirds of all the new fixed lines in 2011. 
This being said, persistent price differentials between Member States indicate the internal 
market in this sector is still incomplete.  

•  The availability of infrastructure for broadband Internet is another important factor for 
the  development  of  the  digital  economy.  The  broadband  gap,  a  measurement  of  the 
dispersion  of  penetration  and  take-up  rates  between  EU  countries,  continued  to  decline. 
Coverage of rural areas remains a challenge in particular in PL, BG, DE47 and SI. While 

46  Czernich,  N.,  Falck,  O.,  Kretschmer,  T.,  and  Woessman,  L.  (2009)  Broadband  infrastructure  and  economic 
growth (CESinfo Working Paper no. 2861. The estimate is based on a panel of OECD countries over 1996-2007. 
47 Although Germany has a low rural coverage of fixed broadband, it has the highest rural coverage of fourth 
generation mobile broadband (LTE), at 41% as of December 2011. Moreover, LTE spectrum license obligations 
18 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
growth  in  the  overall  number  of  broadband  connections  is  slowing  down,  the  trend 
towards higher speeds is clear and speeds have increased significantly.  

• 

In addition to ensuring ubiquitous coverage, it is important that Member States continue 
promoting  effective  investments  in  fast  and  ultrafast  broadband  in  line  with  the 
performance  targets  set  in  the  Digital  Agenda.  This  requires  providing  adequate 
investment  incentives,  in  particular  a  predictable  and  effective  regulatory  framework 
anchored  on  strong  and  independent  regulators,  and  targeted  public  support,  where 
appropriate. 

•  The  mobile  sector  is  the  most  competitive  segment  of  the  overall  telecoms  market. 
Mobile  broadband  surged  in  2011  with  penetration  reaching  43%  of  the  population  in 
January  2012  from  26.8%  in  January  2011,  with  wide  differences  among  the  Member 
States48.  The  market  shares  of  both  the  leading  and  the  second  operators  have  been 
slightly  declining.  High  levels  of  concentration  however  are  still  observed  in  CY,  (only 
two operators), followed by LU and SI. In addition, certain parts of the mobile market (i.e. 
roaming) have  been largely  impervious  to competition, requiring legislative intervention 
to secure structural reform. 

•  However,  the  expected exponential  growth  will  only  be  possible  as  long  as  sufficient 
spectrum is available. Given current growth rates of services and thus of spectrum usage, 
Member States must make the full amount of harmonised spectrum available, and ensure 
its efficient use. Regarding the 800 MHz band,  this  concerns  BE,  BG,  CZ,  EE,  EL,  ES, 
CY, LV, LT, HU, MT, AT, PL, RO, SI, SK, FI and UK. While a number of these Member 
States have applied for derogations, every effort must be made to clear the band and make 
it available for wireless broadband as rapidly as possible. 

•  Whilst  the  ‘internet  economy’  in  the  EU-27  is  expected  to  grow  from  3.8%  of  GDP  in 
2010  to  5.7%  in  201649,  progress  in  cross-border  e-commerce  remains  very  low.  In 
2011,  only  10%  of  the  total  EU  population  ordered  goods  or  services  from  sellers  from 
other  EU  countries50.  Moreover,  the  more  developed  countries  in  cross-border  e-
commerce  are  progressing  much  faster  than  the  less  developed  ones,  creating  an  ever 
wider gap.  

•  The  low  use  of  cross-border  e-commerce  by  individuals  is  matched  by  the  limited 
number  of  enterprises  selling  cross-border  electronically.  In  2010,  only  6%  of 
enterprises engaged in e-commerce made e-sales to other EU countries, including in the 
countries with the highest share of firms involved in e-commerce. The EU is still missing 
out on the big benefits of e-commerce51. This leads to a total loss of potential cross-border 
trade of 26 billion euros each year. Accordingly, significant welfare gains for European 

target 90% of population residing in the "white gaps" (i.e. areas where the download speed of broadband services 
is less than 1Mbps). 
48 Mobile broadband is most popular in the Nordic countries, where penetration is above 80%. Four Member 
States (RO, BU, HU, BE) have a mobile broadband penetration rate lower 20% 
49https://www.bcgperspectives.com/content/articles/media_entertainment_strategic_planning_4_2_trillion_oppor

tunity_internet_economy_g20/ 

50 Preliminary results of very recent surveys indicate a significant improvement in this area lately. 
51 Civic Consulting (2011) 

19 

 
 
 
 
 
 
 
                                                                                                                                                                                          
consumers from lower online prices and increased online choice could be brought by 
enhanced integration of e-commerce in the EU.  

•  Although  consumers  appreciate  the  convenience  of  shopping  anytime  and  anywhere  via 
the e-commerce sales channel and getting access to information and a broader selection of 
products,  not  all  users  who  take  advantage  of  informing  themselves  over  the  Internet 
about  available  goods  or  services  finally  purchase  the  products  online.  Reasons  include 
lack  of  trust  or  information,  privacy  and/  or  security  concerns  and  concerns  about 
getting redress in case something goes wrong52.The Commission has taken a number of 
initiatives  to  address  these  concerns.  For  instance  the  new  Consumer  Rights  Directive 
(CRD)53,  which  will  become  applicable  from  13  June  2014  at  the  latest,  will  strengthen 
consumers'  rights  when  buying  on  the  Internet  thereby  encouraging  legitimate  e-
commerce.  The  proposal  for  ADR-ODR  legislation54  aims  to  ensure  that  quality 
alternative  dispute  resolution  tools  are  effectively  put  in  place  and  work  in  practice  and 
that an EU-wide on-line platform is established for cross-border e-commerce complaints. 
A proposal for a Regulation on a Common European Sales law55 has been tabled with 
the aim to give traders the option to sell their products to citizens in other Member States 
on  the  basis  of  a  single  set  of  contract  law  rules,  based  on  a  high  level  of  consumer 
protection.  

•  Another  key  obstacle  to  cross-border  e-commerce  is  delivery.  This  is  a  key  element  for 
building trust between sellers and buyers. To address this barrier, a Green paper on an 
integrated parcel  delivery  market will launch a wide-ranging consultation and will be 
followed by a set of actions with the view to support the growth of e-commerce in the EU. 

• 

In  these  times  of  austerity,  eGovernment  has  the  potential  to  substantially  improve  the 
way in which public services are provided and yield considerable public savings, and also 
reduce  costs  for  business.  A  full  transition  to  e-procurement  in  the  EU  could  deliver 
savings  in  public  expenditure  of  up  to  €100bn 56.  E-procurement  can  also  increase  the 
share  of  cross-border  procurement.  However,  the  use  of  electronic  procedures  in  public 
procurement  remains  limited  at  5%  to  10%57.  Some  Member  States  have  nevertheless 
made  significant  progress  towards  full  use  of  e-procurement,  i.e.  PT  (mandatory  for 
most procedures) and LT (75% in 2011). By contrast, electronic submission of tenders is 
currently not implemented in BG and SI. Generally on eGovernment, AT, DK, EE, SE are 
well advanced, whilst other are currently lagging behind in this area i.e. SI, BG, RO, IT, 
PL HU.  

• 

ICT  skills  are  a  prerequisite  for  firms  and  citizens  to  fully  seize  the  growth  and 
employment  opportunities  brought  by  the  digital  economy.  The  EU  faces  a  shortage  of 

52 Eurobarometer (299/2011) 
53  Directive  2011/83/EU  of  25 October  2011  on  consumer  rights,  amending  Council  Directive  93/13/EEC  and 
Directive  1999/44/EC  of  the  European  Parliament  and  of  the  Council  and  repealing  Council  Directive 
85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council 
54 Proposal for a Directive on alternative dispute resolution for consumer disputes, COM(2011)793 final of 29 
November 2011; Proposal for a Regulation on online dispute resolution for consumer disputes, COM(2011)794 
final of 29 November 2011. 
55 Proposal for a Regulation on a Common European Sales Law, COM (2011) 635 final 
56 European Commission Communication: "A strategy for e-procurement" COM(2012)179 final 
57 European Commission Communication: "A strategy for e-procurement" COM(2012)179 final 

20 

 
 
 
 
 
 
                                                            
ICT  professionals58:  it  is  estimated  that  there  will  be  up  to  700  000  unfilled  ICT 
practitioners'  vacancies  in  the  EU  by  the  year  2015.  Despite  the  economic  downturn 
demand for ICT specialists is growing by 3% per year. In addition, ICT skills are needed 
throughout  the  economy  and  have  become  a  precondition  for  business  performance  and 
employability. This challenge has been well addressed in SE, LV, DK, LU and FI. 

Policy priorities 

•  Member States should focus on the following key priorities: 

o 

 Step  up  efforts  in  the  deployment  of  fixed  and  wireless  broadband  and  in 
improving its quality. This investment requires putting in place adequate incentives, 
both in terms of efficient regulation and, where necessary, targeted public support 
(e.g.  via  the  Structural  Funds  and,  in  the  next  MFF,  CEF)  bringing  the  radio 
spectrum  available  for  wireless  broadband  to  1200  MHz  of  bandwidth  and 
effectively  licensing  the  spectrum  bands  already  harmonised  including  the  800 
MHz band.  

o  Ensure the correct application of the E-commerce Directive. Applying harmonised 
rules  on  issues  such  as  transparency,  information  requirements  and  electronic 
contracts will contribute to restoring legal certainty for business and consumers. 

o  Ensure  timely  and  correct  transposition  in  national  law  (due  by  13  December 
2013)  and  subsequent  implementation  of  the  Consumer  Rights  Directive59  to 
enhance  consumer  protection  and  therefore  reinforce  confidence  and  trust  in  the  e-
commerce sales channel. 

o  Increase the availability of user-friendly on-line public services, including through 
cross-border  interconnection  and  infrastructures  (notably  with  the  support  of  the  
Connecting  Europe  Facility60),  making  eProcurement 
interoperable  and 
mandatory  and  reinforcing  the  introduction  of  eHealth  for  more  efficient  public 
health systems. 

o  Invest  in  ICT  training,  notably  with  the  use  of  ESF,  and  adopt  an  eCompetence 
Framework  to  ensure  sufficient  qualifications  among  the  workforce  for  modern 
business practices. 

58 Report for the European Commission "Anticipating the Evolution of the Supply and Demand of e-Skills in 
Europe (2010-2015)" Empirica and IDC Europe, December 2009. 
59 European Commission Communication "A European Consumer Agenda - Boosting Confidence and Growth", 
COM(2012) 225 final 
60 Proposal for a Regulation establishing the Connecting Europe Facility, COM(2011)665 final 

21 

 
 
 
 
 
 
 
 
 
                                                            
Annex: 

INTERNAL MARKET ENFORCEMENT TABLE IN KEY SECTORS - State of play as at 25 October 2012

The'Better Governance for the Single Market communication' calls Member States:
- to commit to ‘zero tolerance’ when it comes to transposition of directives, i.e. respecting [1] a transposition deficit target and [2] a compliance deficit target of 0% 
- to ensure quick compliance to allow the [3] duration of infringement procedures to be reduced to 18 months on average
- to speed up the process for complying with judgments of the Court of Justice, i.e. [4] achieving full compliance within 12 months on average

BE

BG CZ

DK

DE

EE

IE

EL

ES

FR

IT

CY

LV

LT

LU

HU MT

NL

AT

PL

PT

RO

SI

SK

FI

SE

UK

EU

I

S
E
C
V
R
E
S

)
s
e
v
i
t
c
e
r
i
d
3
(

I

L
A
C
N
A
N
F

I

I

S
E
C
V
R
E
S

)
e
v
i
t
c
e
r
i
d
1
(

T
R
O
P
S
N
A
R
T

)
s
e
v
i
t
c
e
r
i
d
7
(

M

I

L
A
T
G
D

I

I

)
e
v
i
t
c
e
r
i
d
1
(

Y
G
R
E
N
E

)
s
e
v
i
t
c
e
r
i
d
4
(

[1] Num ber of directives not fully 
transposed yet
[2] Num ber of pending infringem ent 
cases for non-conform ity
[3] average duration of pending 
infringem ent cases
[4] average duration since Court's 
judgm ents
[1] Num ber of directives not fully 
transposed yet
[2] Num ber of pending infringem ent 
cases for non-conform ity
[3] average duration of pending 
infringem ent cases
[4] average duration since Court's 
judgm ents
[1] Num ber of directives not fully 
transposed yet
[2] Num ber of pending infringem ent 
cases for non-conform ity
[3] average duration of pending 
infringem ent cases
[4] average duration since Court's 
judgm ents
[1] Num ber of directives not fully 
transposed yet
[2] Num ber of pending infringem ent 
cases for non-conform ity
[3] average duration of pending 
infringem ent cases
[4] average duration since Court's 
judgm ents
[1] Num ber of directives not fully 
transposed yet
[2] Num ber of pending infringem ent 
cases for non-conform ity
[3] average duration of pending 
infringem ent cases
[4] average duration since Court's 
judgm ents

0

1

0

0

0

0

24.8

60.1

72.2

0

0

1

1

0

0

0

1

0

0

0

1

2.0

27.6

51.9

0

0

1

0

0

0

3

0

0

0

1

0

0

0

0

0

0

0

0

0

0

0

0

0

23.0

0

0

0

1

0

0

0

0

1

1

0

1

0

1

0

2

0.8

27.9

23.8

48.1

0

0

0

1

0

0

1

1

0

0

0

1

0

0

0

0

1

2

0

0

12.8

0

0

0

1

0

0

0

0

1

0

0

0

72.2

0

0

0

1

0

0

0

0

0

2

0

0

0

0

0

0

0

0

0

1

0

0

11.9

38.2

0.8

23.0

40.0

72.2

10.8

0

0

1

0

0

0

0

0

0

0

0

1

0

0

1

1

0

0

0

1

0

0

0

1

0

0

0

0

0

1

0

0

0

0

1

1

0

0

0

1

0

0

0

0

44.7

72.2

51.9

27.6

0.8

27.6

27.6

22.7

27.6

3.2

51.9

28.0

51.9

27.6

3.2

3.2

51.9

34.6

24.6

27.6

27.6

0

0

1

0

0

0

1

0

0

1

0.8

0

0

0

0

1

0

0

0

1

0

0

0

63.9

1

0

0

0

1

0

0

0

3

0

0

0

1

0

0

0

1

0

0

0

1

0

0

0

1

0

0

0

1

0

0

0

1

0

0

0

1

0

0

0

3

0

0

0

1

0

0

0

1

0

0

0

3

0

0

0

0

0

0

0

0

0

3

0

0

1

24.8

0

0

0

0

0

0

0

0

0

0

0

0

1

1

8.0

0

0

3

0

0

7

24.9
months
2.2
months

0

0

0.0
months
0.0
months

2

22

23.2
months
0.0
months

0

1

2.4
months
0.0
months

3

0

7.0
months
0.0
months

0

0

0

0

0

0

1

0

1.1

8.9

1.1

1.1

8.9

12.8

1.1

1.1

1.1

1.1

8.9

1.1

8.9

8.9

1.1

1.1

1.1

1.1

7.7

1.1

8.9

8.7

8.9

8.9

12.8

8.9

OVERALL RANKING

19

23

9

1

8

9

27

26

16

24

4

14

9

17

13

6

2

18

21

25

3

9

22

6

5

15

19

Legend

Transposition deficit

Compliance deficit 

Pending cases duration

Duration since Court's judgment

Not applicable

Ranking*

0%

0%

≤ 18 months

≤ 12 months

> 0%

> 0%

> 18 months

> 12 months

0 target missed

> 3 targets missed

1-3 targets missed

* The overall ranking has been calculated as the average of the ranking obtained for each single indicator

- The transposition deficit measures the number of directives which have not been fully transposed yet. As transposed 
Directives are indicated those where the MS has declared full transposition and the prima facie examination by the COM 
of the notified measures and other information provided by the MS has indicated that the transposition could be 
considered complete or where the prima facie examination by the COM has not been finalised yet.
- The compliance deficit measures the number of Directives against which infringement proceedings for non-conformity 
are opened
- The pending cases duration is calculated from the date on which the Commission sends a letter of formal notice to the 
completion of the pre-litigation phase