COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL setting out the conditions and procedure by which the Commission may request undertakings and associations of undertakings to provide information in relation to the internal market and related areas
Date: 2017-05-02
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: EU competence, EU initiative, administrative cooperation, application of EU law, cross-frontier data flow, data collection, exchange of information, single market, trade information, type of business

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   EUROPEAN COMMISSION  Brussels, 2.5.2017  SWD(2017) 217 final   Compliance Package COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a   REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL setting out the conditions and procedure by which the Commission may request undertakings and associations of undertakings to provide information in relation to the internal market and related areas  {COM(2017) 257 final} {SWD(2017) 215 final} {SWD(2017) 216 final}  
 
 
Impact assessment on Proposal to introduce a Single Market Information Tool  

Executive Summary Sheet 

A. Need for action 

Why? What is the problem being addressed?  
EU  citizens  and  companies  are  frustrated  that  barriers  to  the  single  market  are  not  being  addressed  quickly 
enough. When they alert the Commission or Member States to a problem in the single market, they must provide 
evidence  to  show  it  is  caused  by  a  breach  of  EU  rules.  This  information  can  be  hard  to  obtain,  especially  in 
cross-border cases. This is because the information is often: 

  detailed,  sensitive  non-public  firm-level  information  that  cannot  be  obtained  from  third  party  data 

providers 

  available to national authorities in only a few Member States  
  not comparable across Member States. 

 Market  participants  who have  this  confidential  information  currently  lack  incentives  to  share  it  and  there  is  no 
system in place to ensure the veracity of shared data. At present, EU and national tools for collecting information 
are not sufficient to get this information from firms, citizens, or national authorities. 

What is this initiative expected to achieve?  

Improve the functioning of the single market through more effective enforcement of rules.   

 
  Make it easier for the Commission and Member States to access firm-level data, if needed to detect and 

correct misapplication of EU law or non-compliance with single market rules. 

  Help Member States to better enforce single market rules at national level. 
 

If  a  Member  State  does  not  comply  with  its  single  market  obligations,  the  Commission  may  use  this 
information to support its infringement policy against it. 

What is the value added of action at the EU level?  
The Commission is best placed to address the issue of collecting and coordinating targeted firm-level information 
in the single market area, given the cross-border nature of the data needed. 

EU action would avoid complex and lengthy coordination efforts between Member States and the Commission, 
especially in cases  where information is needed from market participants  operating in more than  one Member 
State.  EU  action  would  help  both  the  Member  States  and  the  Commission  to  get  the  information  needed  and 
reduce the administrative burden for the firms and public authorities involved.  

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  
A  non-legislative  option  could  involve  Member  States  and  the  Commission  exchanging  best  practice  and 
developing guidance on collecting firm-level information. Other legislative options still being considered:  

  Option 2 removes national rules preventing national authorities from sharing with the Commission and 
other  Member  States  firm-level  information  they  already  possess  or  can  access  under  existing 
EU/national law.  

  Option 3 introduces investigative powers through national-level single market information tools.  
  Option 4 introduces an EU-level Single Market Information Tool (SMIT), to be used on a case-by-case 
basis.  It  would  be  limited  to  instances  where  it  is  suspected  that  barriers  are  preventing  the  single 
market  from working,  and  where  the requested  information  is  needed  for quick  and effective  decision-
making and is not available quickly enough through other means. Information would only be requested 
from market participants that can easily provide it.  
  Option 5 is a hybrid option combining options 2 and 4.  

Options  abandoned  include  expanding  the  coverage  of  European  statistics  and  introducing  regular  reporting 
obligations under the Accounting Directive. SMIT (Option 4) is the preferred option. It scores highest in terms of 
subsidiarity and proportionality and is the most effective and cost-efficient option. It will help individual Member 
states to overcome coordination and legal jurisdiction problems in cross-border cases. 

Who supports which option?  
The public consultation showed that most firms prefer to share information voluntarily, so favour a non-legislative 
option. If SMIT is implemented, they say it should safeguard data confidentiality and be used only as a last 

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resort. Only readily available information should be requested. Of the 10 Member States that responded, four 
support SMIT, and two do not. Authorities from two Member States would prefer that the Commission coordinate 
information requests, while two would rather be given the power to request information from firms in any Member 
State directly, without Commission involvement. All consumer organisations support the use of SMIT if the 
information is essential to resolving a breach of the rights of consumers or businesses. Half of consumer 
organisations support using SMIT to prepare new EU rules. 

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)? 
The cost-benefit calculation for SMIT (Option 4) is based on the assumption that it  will be used yearly for four 
small  requests,  involving  up  to  five  firms,  and  one  larger  request,  involving  up  to  50  firms.  Having  robust 
information  on  malfunctions  in  the  single  market  would  enable  the  Commission  and  national  authorities  to 
ensure  greater  compliance  with  single  market  law  and  better  designed  EU  policies.  This  would  strengthen 
consumer trust in the single market and contribute to fulfilling its potential. Better access to information should 
result in better-targeted single market enforcement at national level, limiting the number of formal infringement 
cases  against  Member  States.  In  two  recent  cases,  up  to  €50  million  in  unpaid  taxes  was  recovered  when 
investigative authorities in the State aid sphere allowed the Commission access to key firm-level information. In 
the single market area, the potential savings on an individual infrastructure procurement case exceed 3 billion 
euros. There could be indirect social/environmental benefits if SMIT is used to address cases of single market 
malfunctioning in those areas. 

What are the costs of the preferred option (if any, otherwise main ones)? 
Responding to SMIT request would involve cost for the targeted firms. For large firms, costs would range from 
€1 200  to  €4 400.  For  small  and  medium-sized  enterprises  (SMEs)  they  would  range  from  €300  to  €1 000.  If 
firms seek legal advice to comply with the information request, they would incur an additional cost ranging from 
€1 000 to €4 000. The total annual cost of preparing responses and legal advice for the estimated five annual 
requests  would  range  from  €370 000  to  €610 000.  Firms  could  also  submit  a  non-confidential  response  to  be 
shared with Member States. This could ease confidentiality concerns at a slight additional cost. A conservative 
estimate  of  the  total  cost  of  SMIT,  including  the  cost  to  the  Commission,  ranges  from  €0.49 million  to 
€1.04 million. There is no direct social or environmental cost. 

How will businesses, SMEs and micro-enterprises be affected? 
SMIT primarily targets large firms with a high market share and places the main administrative burden on them. 
Micro-enterprises will be exempt. SMEs may sometimes be asked to participate. The estimated cost of replying 
for an individual SME ranges from €300 to €1 000 per request with an additional potential legal advice cost of 
€1 000 (roughly 25 % of the response cost for a large firm). Firms of all sizes will benefit from a better functioning 
single market thanks to more targeted enforcement by the Commission and the Member States. They would also 
benefit from better-designed EU rules and a more effective regulatory environment. In addition, better evidence 
could prevent unnecessary rules being drawn up.  

Will there be significant impacts on national budgets and administrations? 
There is no cost of implementing SMIT for national authorities. The Commission would incur data collection and 
analysis costs ranging from €120 000 to €430 000 for the estimated five annual requests. The Commission costs 
will not require any new budgetary commitments, just the redeployment of existing staff and infrastructure. The 
Commission could save between €0.7 million and €1.6 million on external reports. National authorities could also 
make savings here. 

Will there be other significant impacts? 
Firms/consumers  would  benefit  from  a  better  functioning  single  market,  through  lower  entry  barriers,  greater 
competition,  more  competitiveness  and  easier/cheaper  cross-border  (and  potentially  international)  expansion. 
This  initiative  fully  respects  the  legitimate  interest  of  firms  to  protect  their  business  secrets.  It  does  not  affect 
personal data protection rights. It also respects the right to good administration, the right of defence, the principle 
of proportionality of sanctions, the right to an effective solution and the right to a fair trial. 

When will the policy be reviewed?  
The policy will be reviewed five years after the adoption of the proposal.  

D. Follow up 

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