Considerations on COM(2017)257 - Conditions and procedure by which the Commission may request undertakings to provide information in relation to the internal market and related areas - EU monitor

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Considerations on COM(2017)257 - Conditions and procedure by which the Commission may request undertakings to provide information in relation to the internal market and related areas

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(1) In accordance with Article 3(3) of Treaty on European Union (TEU), the establishment of an internal market is one of the main objectives to be reached by the Union in cooperation with the Member States. Pursuant to Article 26(1) of the Treaty on the Functioning of the European Union (TFEU), the Union shall adopt measures with the aim of establishing or ensuring the functioning of the internal market. Under Article 26(2) TFEU, the internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured. The internal market has generated new opportunities and economies of scale for European undertakings, has created jobs, has offered greater choice at lower prices for consumers and has enabled European citizens to live, study and work in the Union. Despite all the progress made, significant difficulties in the establishment and functioning of the internal market remain and European citizens and undertakings are unable to reap the full benefits of the internal market. In certain cases, suboptimal information affecting the action by the Commission on the application of Union law in the area of the internal market increases the risk of the emergence of difficulties to trade in the internal market resulting from uncoordinated national enforcement activities or multifarious development of national regulatory solutions to those problems.

(2) Article 337 TFEU provides for the Commission's power, within the limits and under the conditions which the Council may lay down acting by a simple majority, to collect any information required for the performance of its tasks. However, in Case C-490/10 European Parliament v Council, the Court has clarified that where the collection of

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OJ C , , p. OJ C , , p.

information contributes directly to the achievement of the objectives of a given European Union policy, the act laying down the conditions for such collection must be based on the legal basis which relates to that policy. This Regulation provides not only for a framework in which the Commission can collect information from undertakings and associations of undertakings, but also for measures to enforce the requests for information. Therefore, while taking fully into account the fact that the Commission derives its power to collect information directly from the Treaty, this Regulation should be based, in addition to Article 337 TFEU, on the provisions of Articles 43(2), 91, 100, 192 and 194(2) TFEU and also of Article 114 TFEU, which provides for the adoption of measures necessary for the establishment and functioning of the internal market, including where differences between national rules are such as to obstruct the fundamental freedoms or where it is necessary to prevent the emergence of difficulties in the establishment and functioning of the internal market.

(3) Detecting and, where appropriate, addressing such difficulties in an efficient and effective manner requires timely access to comprehensive, accurate and reliable quantitative and qualitative market information. This is particularly the case when the Commission acts as guardian of the Treaties, pursuant to Article 17(1) TEU which entrusts the Commission with the tasks to ensure the application of the Treaties, and of the measures adopted by the institutions pursuant to them, and to oversee the application of Union law. As established by the Court of Justice on numerous occasions in the context of infringement proceedings under Article 258 TFEU, it is the Commission’s responsibility to place before the Court of Justice all the relevant factual information to prove the existence of an infringement. Such information may include in certain instances market information, needed to enable the Court of Justice to establish whether the Union law has been breached.

(4) The Commission does not have general investigative powers of its own to help it enforce Union law in the area of the internal market. The existing investigative powers related to the competition rules, as prescribed by Council Regulation (EC) No 1/2003,26 Council Regulation (EC) No 139/200427 and Council Regulation (EU) 2015/1589,28 are limited by their legal basis to defined areas and do not allow the collection and use of the gathered information for other internal market-related policy purposes.

(5) As recognised by the Court of Justice, when enforcing Union law, the Commission, whereas it may rely on indicia, is largely reliant on the information provided by complainants, by public and private bodies, and by the Member States concerned. Pursuant to Article 4(3) TEU, Member States are under the duty, as recalled several times by the Court of Justice, to facilitate the Commission’s tasks, including in particular its role as guardian of the Treaties. However, Member States may not always have access to the relevant market information that the Commission would need to perform its tasks or their national rules on information collection may prevent them from disclosing the information collected.

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Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on

competition laid down in Articles 81 and 82 of the Treaty (OJ L 1, 4.1.2003, p. 1).

Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between

undertakings (OJ L 32, 5.2.2004, p. 1).

Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of

Article 108 of the Treaty on the Functioning of the European Union (OJ L 248, 24.9.2015, p. 9).

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(6) To complement the information received from Member States, the Commission relies on voluntary cooperation from interested parties, in particular complainants. However, in certain instances of complex cases with cross-border dimension, the Commission would need, in order to perform a sound analysis, to complete the information received through these channels to ensure, for instance, that it is fully accurate or that information from different Member States is in a comparable format. Moreover, the Commission may not always rely on official statistics for enforcement action, as there is a time lag in their production and they may not always be sufficiently detailed or disaggregated for the purposes of dealing with specific cases.

(7) Although the current regulatory framework as regards the Commission’s means to obtain information for addressing difficulties to the establishment and functioning of the internal market rules works efficiently for a great majority of cases, challenges arise in specific situations where detailed, comparable, up-to-date, and often confidential, specific market data are necessary within a limited time frame. Indeed, a sound economic analysis is particularly appropriate for assessing the existence of difficulties to the establishment and functioning of the internal market in complex cases with cross-border dimension, notably when those cases relate to fast-moving markets, new economic activities or new business models challenging existing economic assumptions. However, completing such assessment may turn to be difficult in the absence of sufficient and comparable information. This renders the task of the Commission to ensure the application of Union law more difficult in those specific situations.

(8) Where detailed, comparable, up-to-date, and often confidential market information could only be obtained from market players in a timely manner, it appears therefore appropriate, as a last resort, to empower the Commission, within the limits and under the conditions laid down in this Regulation, to request undertakings and associations of undertakings to directly provide it, in a timely manner, with comprehensive, accurate and reliable quantitative and qualitative market information where other sources of information have proven unavailable, insufficient or inadequate. To this effect, the Commission should first adopt a decision stating why other means to obtain the necessary information have proven ineffective. It is understood that the notion of undertaking has the same meaning as in other areas of EU law, in particular competition law.

(9) To ensure that the operation of this Regulation will involve Member States, reflecting the principle of sincere cooperation between the Commission and the Member States stipulated in Article 4(3) TEU, it is appropriate to provide that any Commission decision stating its intention to use the power to request information from undertakings or associations of undertakings under this Regulation shall be notified to the Member State or the Member States concerned without delay.

(10) Such empowerment does not aim at creating new enforcement powers for the Commission such as, in particular, the powers to pursue infringements of Union law in the internal market area against individual market participants. Its purpose is rather to provide the Commission with additional fact-finding ability where this is strictly required for performing the task entrusted to the Commission by the TFEU to ensure the application of Union law in relation to the aim of establishing and ensuring the functioning of the internal market. In the interest of the establishment of a fully functioning internal market, it is appropriate to clarify that such empowerment covers also those economic sectors within the internal market for which TFEU has foreseen

common policies: agriculture and fisheries (excluding the conservation of marine biological resources), transport, environment and energy.

(11) For this investigative tool to be effective, the information sought should relate to the application of relevant Union law. This may consist, for example, of factual market data, including cost structure, pricing policy, products or services characteristics or geographical distribution of customers and suppliers. It may also consist of undertakings’ or associations of undertakings’ fact-based analysis of the functioning of the internal market, such as in relation to perceived regulatory and entry barriers or to costs of cross-border operations. In order to minimise costs of replying to requests for information, such requests should only cover information that is likely to be at the disposal of the undertaking or association of undertakings concerned.

(12) When issuing requests for information to undertakings and associations of undertakings, the Commission is required to undertake a careful selection of addressees of the requests, so that requests are only addressed to undertakings and associations of undertakings that are capable of providing sufficiently relevant information, notably larger undertakings in the relevant Member States. These requests for information are aimed at solving a presumed, i.e. based on the available information, serious problem with the application of Union law in the areas of the internal market, agriculture and fisheries (excluding the conservation of marine biological resources), transport, environment and energy. Their aim is not to prosecute undertakings for the underpinning behaviour, if any. Accordingly, sanctions provided for in the instrument are designed to address exclusively two instances. They only cover an intentional or through gross negligence lack of a response to a request for information and an intentionally or through gross negligence incorrect, incomplete, or misleading reply. The collected information, if relevant, could also be used to provide insight into situations where undertakings find it difficult to comply with the legislation, with a view to improving the proper application of the internal market rules. With a view to avoid disproportionate administrative burden for micro-undertakings, which are anyway unlikely to be in a position to provide sufficiently relevant information, the Commission should be precluded from issuing requests for information to this category of undertakings. When issuing requests for information to small and medium-sized undertakings, the Commission should take due account of the principle of proportionality. While SMEs are unlikely to operate at a larger scale enabling them to significantly affect market outcomes, the information gathered from SMEs could prove valuable in informing the Commission on difficulties in establishment and functioning of the internal market. Information readily available to SMEs might be of anecdotal nature but it could still alert the Commission about single market difficulties SMEs might suffer from. SMEs would normally not and should not incur any significant additional costs of data gathering in response to this tool. Given their relatively weaker bargaining position in value chains, SMEs might be more forthcoming with information when granted a procedure duly respecting confidentiality and anonymity. Resolving a difficulty in the single market establishment and functioning could in particular benefit SMEs as it is often the small innovative firms which face the greatest barriers when trying to start up and scale up across the single market. For reasons of consistency and legal certainty, the definitions

of ‘micro-undertaking’, ‘small undertaking’ and ‘medium-sized undertaking’ of Directive 2013/34/EU of the European Parliament and of the Council29 should apply.

(13) In the interest of the consistency in the application of Union law in the area of the internal market as well as agriculture, fisheries (excluding the conservation of marine biological resources), transport, environment and energy, it is necessary to establish mechanisms for the sharing of information between the Commission and the Member States in relation to the requests for information and, where appropriate, to the replies to such requests, without prejudice to professional secrecy obligations.

(14) The investigative tool provided for in this Regulation is particularly useful for ensuring the application of Union law in the area of the internal market by the Commission. It is also useful, for any subsequent enforcement action by the Member States concerned that would require the use of the relevant information collected using this power and disclosed by the Commission to the Member States concerned. Moreover, where difficulties in the application of existing rules are experienced, including situations where undertakings are not able to comply with the legislation due to lack of legal clarity, this investigative tool could also be useful after the use of other tools and sources of relevant information have proven inadequate, for contributing to the conception or design of regulatory solutions. It is also appropriate not to allow the use of such information for other purposes, in particular the application of the competition rules of the TFEU, without prejudice to the reuse of information made public.

(15) The Commission should be able to enforce compliance with the requests for information it addresses to any undertaking or association of undertakings, as appropriate, by means of proportionate fines and periodic penalty payments imposed by way of decision. In setting the amounts of fines and periodic penalty payments, the Commission should take due account of the principle of proportionality (including the aspects of appropriateness), in particular as regards small and medium-sized undertakings. The rights of the parties requested to provide information should be safeguarded by giving them the opportunity to make known their views before any decision imposing fines or periodic penalty payments is taken.

(16) Taking due account of the principle of proportionality (including the aspects of appropriateness), the Commission should be able to reduce the periodic penalty payments or waive them entirely, when addressees of requests provide the information requested, albeit after the expiry of the deadline. For reasons of legal certainty, it is also appropriate to provide for limitation periods for the imposition and enforcement of fines and periodic penalty payments.

(17) The Court of Justice should, in accordance with Article 261 TFEU, have unlimited jurisdiction in respect of decisions by which the Commission imposes fines or periodic penalty payments under this Regulation, which means that it may cancel, reduce or increase the fine or periodic penalty payment imposed by the Commission.

(18) In the interests of transparency and legal certainty, it is appropriate to give public information on Commission decisions. The Commission, when publishing and

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Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p.19).

handling such information, should respect the rules on professional secrecy, including the protection of all confidential information, in accordance with Article 339 TFEU.

(19) The disclosure of information about an undertaking’s business activity could result in a serious harm to the same undertaking. Therefore, the Commission should take due account of the legitimate interests of undertakings, in particular the protection of their business secrets. To ensure that business secrets and other confidential information provided to the Commission are treated in compliance with Article 339 TFEU, any undertaking or association of undertaking submitting information should clearly identify which information it considers to be confidential and why it is confidential. The Commission should not be able to disclose confidential information provided by such respondents to the Member State concerned by the request unless it has previously obtained their agreement to disclose that information to that effect. The respondent concerned should be required to provide the Commission with a separate non-confidential version of the information that could be disclosed to the relevant Member State. In cases where information marked as confidential does not seem to be covered by obligations of professional secrecy, it is appropriate to have a mechanism in place according to which the Commission can decide the extent to which such information can be disclosed. Any such decision to reject a claim that a piece of information is confidential should indicate a period at the end of which it may be disclosed, so that the respondent can make use of any judicial protection available to it, including any interim measure. The rights of the respondent should be safeguarded by giving it the opportunity to make known its views before any decision to reject the confidentiality claim is taken.

(20) Given the exceptionality of the investigative tool provided for in this Regulation and with a view to monitoring the proportionality of its use, the Commission shall draw up a report every two years on the application of this Regulation and shall submit it to the European Parliament and to the Council.

(21) This Regulation respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union. In particular, this Regulation seeks to ensure full respect for the right to respect for private and family life, the right to protection of personal data, the right to good administration, in in particular the access to files, while respecting business secrecy, the right to an effective remedy and to a fair trial, the right of defence and the principles of legality and proportionality of penalties.

(22) Where the measures provided for in this Regulation entail the processing of personal data, they should be carried out in accordance with Union law on the protection of personal data, in particular Directive 95/46/EC30. With regard to the processing of persona data by the Commission and within the framework of this Regulation, it shall comply with the provisions of Regulation (EC) No 45/2001 of the European Parliament and of the Council31.

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Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data, (OJ L 281, 23.11.1995).

Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data, (OJ L 8, 12.1.2001, p. 1).

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(23) Since the objectives of this Regulation, namely facilitating the Commission’s access to market information necessary for carrying out its tasks in order to achieve a smooth-functioning of the internal market cannot be sufficiently achieved by the Member States but can rather, by reason of its scale and effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(24) This Regulation should not affect the investigative powers of the Member States. This Regulation does not aim to amend, restrict or annul the investigative powers that the Commission or bodies, offices or agencies of the Union have already received pursuant to other Union legal instruments. In particular, this Regulation should not affect the investigative powers of the Commission related to the application of the competition rules necessary for the functioning of the internal market.

(25) The European Data Protection Supervisor was consulted in accordance with Article 28(2) of Regulation (EC) 45/2001 of the European Parliament and of the Council and delivered an opinion on […].