EC failing to deliver SME-proofed regulatory regime, claim business groups

Rules introduced by the European Union to lighten the regulatory burden on small and medium-sized businesses are not being applied in a consistent manner by the European Commission (EC), according to European business groups BusinessEurope, Eurochambres, and SMEunited. The three groups joined forces to analyse the application of the SME Test across the EC’s services. Some 26 impact assessments were checked against the EC’s own better regulation guidelines to assess whether and to what extent the SME Test, a mandatory tool in ensuring an SME-proofed regulatory regime, is carried out. A report based on the analysis – Making better regulation work better for SMEs – was presented during the recent 2022 EU SME Assembly in Prague. The analysis revealed a mixed picture. “While better regulation principles have steadily grown in importance in the working procedures of the EU over the past two decades, the SME Test guidelines are still not applied consistently by all Commission services,” concluded the groups in a joint statement. BusinessEurope director general Markus Beyrer said: “The impacts and costs created by Commission proposals on SMEs are too often neglected. This needs to be improved by consistently devising mitigating measures based on solid and reliable data. Not only direct but also indirect costs should be identified and reduced if not eliminated.” Eurochambres CEO Ben Butters added: “With business confidence across Europe at historically low levels, it is more important than ever that EU legislative initiatives respect the ‘think small first’ principle and contribute to an SME-friendly policy environment.” SMEunited secretary general Véronique Willems concluded: “This is every DG’s responsibility to carry out a meaningful SME Test. Only a thorough analysis at every step will guarantee proportionate rules enabling entrepreneurs to flourish.” The SME Test Benchmark’s main findings include: 69% of the proposals’ inception impact assessments (IAs) take into consideration whether SMEs are affected. Among the 26 initiatives under analysis, 24 respect the 12-week period for the open public consultation. However, in 16 cases the period overlapped with holidays. Ten out of 26 consultations in the IAs report include one or more sections presenting SMEs’ views. The groups said that this is a “disappointing” result, as in most cases SMEs were directly or indirectly impacted by the initiatives. IAs do not pay sufficient attention to indirect impact on SMEs when considering mitigating measures. The business groups said, in line with the ‘think small first’ principle, the Commission services must reflect SME needs early in the IA process. This could be done systematically, foreseeing a more inclusive involvement of SME stakeholders. IAs should also dedicate chapters to a thorough assessment of the impact on SMEs to consolidate this information in a clear and transparent manner, the groups proposed. IAs should also differentiate between different size-classes of SMEs (micro, small and medium) to allow for a more granular and targeted assessment of each initiative’s impact. And IAs must assess the indirect effect of policies, thus going further than assessing the sole direct effect of a policy. “The SME Test, building on the rationale of the ‘think small first’ principle to which the European Commission rightly subscribes, plays a very important role. While businesses face increasing economic challenges and uncertainty, it is important to follow a fit-for-purpose and proportional law-making approach,” concluded the three groups.

EC failing to deliver SME-proofed regulatory regime, claim business groups

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