Single Market Information Tool – right approach, wrong instrument

In May 2017, the European Commission presented a proposal for a regulation for a “Single Market Information Tool” as a component of the so-called “Compliance Package”. The latter comprises a number of initiatives intended to help the European Single Market function better. The new instrument would empower the European Commission to collect data and request information directly from companies and business associations in the event of a “serious difficulty”.

The objective of the Commission’s proposal is to enable easier access to data where there is a “serious difficulty” with the application of Union law. This would be achieved through a right to request information from companies and business associations. The request could also relate to highly sensitive company data such as cost structure, pricing policy, profit, work contracts and supplier relations. No individual instance of poor conduct by the company or association in question is necessary for the information right to be triggered.

Envisaged information and data collection rights unacceptable because they disregard high data protection requirements

With the data collected, the European Commission hopes to gather information to help smooth out single market disruptions. The European Commission often lacks an adequate data base for appropriate countermeasures because the data have not hitherto existed in the Member States or because these data are not communicated promptly or at all by the Member States. A direct request for information would be used only as a last resort and data requiring protection would have to be handled in accordance with strict confidentiality standards.

Nevertheless, the conditions for assertion of the right are regulated much too vaguely. Thus, a right to collect data would exist as soon as a “serious difficulty with the application of Union law risks undermining the attainment of an important Union policy objective”. A series of criteria would prevent the request for information from being triggered too rapidly, e.g. only where the required information is not available to the European Commission to a sufficient, adequate or proportionate degree. Furthermore, it is necessary that timely provision of this information is not possible because it is not contained in a publicly available source or has not been provided despite the Commission’s request. Provisions on how confidential data are to be handled and the hurdle whereby the request for information can be triggered only following a decision by the college of Commissioners are intended to protect against far-reaching rights of access to company information.

Enforceable information and data collection rights unacceptable

Nevertheless, the instrument as a whole should be rejected. Transposition and enforcement of single market law is in the firs line the responsibility of the Member States. As long as as only general “serious single market difficulties” are deemed to obtain and as long as it is not possible to substantiate a specific infringement of single market rules by the company in question, a duty to provide information on sometimes highly sensitive company data is contrary to the constitutionally protected right to protection of business and company secrets. This contradiction is intensified by the fact that the Commission proposal provides for very severe sanctions if the company or business association fails to comply with the information request.

Better regulation aspects disregarded

BDI had already taken a critical stance on the instrument ahead of publication of the proposal for a regulation in the framework of the related public consultation and in discussions with the European Commission. The “Regulatory Scrutiny Board”, an internal Commission committee which verifies draft impact assessments, initially rejected the measure. According to the committee, it was not possible to demonstrate either the benefit of the measure or sufficient proportionality. In addition, the requirements to be considered for the better regulation agenda were not adequately taken into account.

BDI will take a detailed position on the proposed legislative act. BDI continues to reject firmly the envisaged direct data collection right vis-à-vis companies and associations of companies.