15 The single market
| (30316)
17569/08
SEC(08) 3074
| Commission staff working document: Market Monitoring: State of play and envisaged follow-up
|
| Legal base | — |
| Document originated | 16 December 2008
|
| Deposited in Parliament | 13 January 2009
|
| Department | HM Treasury |
| Basis of consideration | EM of 22 January 2009
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| Previous Committee Report | None
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| To be discussed in Council | None planned
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
15.1 Amongst the recommendations in the 2007 Single Market Review[45]
was developing a more systematic and integrated approach to monitoring
the functioning of key goods and services markets as a contribution
to evidence-based and impact driven policies to facilitate a better
functioning single market.
15.2 In December 2008 the Commission adopted a package
of proposals to help implement the European Economic Recovery
Plan[46] and reinforce
the Lisbon Strategy for Growth and Jobs. Issues covered by the
package include the Community Lisbon Programme,[47]
skills,[48] the Globalisation
Adjustment Fund,[49]
cohesion policy,[50]
education and training,[51]
the Single Market. Review,[52]
external aspects of the Lisbon Strategy[53]
and market monitoring, the subject of this present document.
The document
15.3 In this staff working document the Commission
reports on its development and piloting of a market monitoring
tool and discusses future activity. The tool is intended to identify
sectors which are of most economic importance to the Community
and to provide recommendations for action where there are market
failures. The Commission says this could complement existing decision-making
processes concerning competition, regulation, innovation and cross-border
integration policy in strategic sectors. The market monitoring
exercise has two stages:
- a macro-level screening carried
out across the Community to identify sectors where the expected
benefits from policy intervention are high because these sectors
are important for growth and adjustment and show signs of possible
market malfunctioning; and
- an in depth micro analysis which looks individually
at identified sectors and the causes of market malfunction, so
as to then recommend appropriate reforms to address the problems.
15.4 The Commission says that the first stage screening
exercise, which was initially completed in November 2007, has
been updated with the most recently available figures. Twenty-four
sectors representing 49% of EU-25 value-added and 52% of EU-25
employment have been identified. Almost all these sectors suffered
from a lack of innovation and, to a lesser extent, inappropriate
market regulation. Of the second stage the Commission says that
there have been four in-depth sector investigations selected,
with task forces set up to investigate the functioning of markets
in the electrical engineering, retail services and pharmaceutical
sectors and the food supply chain.
15.5 For the food supply chain study the Commission
identified a number of issues around the degree of competition
and regulation. This study has already been concluded and the
Commission has presented recommendations and a roadmap for improving
the functioning of the food supply chain for implementation in
2009.[54] The study on
the retail services sector will:
- build on the food supply chain
work but have a broader scope;
- examine the regulatory framework as well as the
functioning of e-commerce;
- produce a scoping paper, expected by March 2009;
and
- deliver a final report at the end of 2009.
15.6 The in-depth investigation of the electrical
engineering sector focused on flat screen televisions and household
refrigerators, because of the volume of sales in Community markets
— the final report is expected in May 2009.
15.7 The study on the pharmaceutical sector will
build on the outcome of the pharmaceutical sector inquiry carried
out by the Directorate-General for Competition.[55]
The study will focus on a limited number of specific pharmaceutical
product markets and will cover issues such as competitiveness,
research and development and innovation or productivity developments.
A report is expected at the second half of 2009.
15.8 In looking ahead the Commission also says that:
- the first stage screening exercise
still needs to be refined — for example, at present the
exercise primarily considers information relative to the supply
side of the markets, due to lack of available data on the demand
side;
- a consumer dimension — which measures the
fragmentation of retail markets, the number of complaints and
the degree of satisfaction — will be added as the Consumer
Scoreboard develops;[56]
- for the second stage it is considering what other
sectors could benefit from an in-depth investigation;
- sectors identified in the first stage will be
considered in combination with other relevant and more qualitative
information;
- the environmental technologies, construction,
and car sectors may be candidates for 2009, the first is a cross-cutting
market which is important for the energy and climate change pillar
of the Lisbon Strategy, the second is one of the largest sectors
in terms of employment in the Community and the third has been
strongly affected by the current financial crisis and was mentioned
in the European Economic Recovery Plan; and
- the market monitoring approach will undergo an
evaluation at the end of 2009 to confirm whether and how market
monitoring should become a permanent tool of the renewed single
market.
The Government's view
15.9 The Economic Secretary to the Treasury (Ian
Pearson) says, in his Explanatory Memorandum of 22 January 2009,
that:
- the Government supports the
Commission's commitment to more evidence-based and impact-driven
policies and, in particular, market monitoring as a tool to facilitate
a better functioning single market;
- it believes market monitoring supports the existing
policy framework such as sectoral enquiries and better regulation
impact assessments;
- in the current climate, market monitoring is
relevant both to the short and long-term economic reform agenda
— identifying and reducing barriers to realising the full
benefits of the single market so that citizens can benefit from
jobs, growth and lower prices;
- market monitoring could help support Government
arguments on open markets for the medium-term;
- the Government supports the sectoral studies
undertaken so far and the Commission's intention to undertake
further studies in 2009;
- it continues to press the Commission to ensure
the data and methodology is robust and that the sector selection
process for in-depth investigations is transparent; and
- it is important for the Commission to consider
incorporating the role of market monitoring recommendations more
formally within the Community's decision-making process in order
that, in cases where Community wide economic reform is needed
and appropriate across a particular sector, actions are taken
forward at the Community level.
Conclusion
15.10 Although this is only an interim report,
and whilst content to clear the document, we draw it to the attention
of the House, given the potential value of market monitoring for
future policy-making.
45 (29198) 15651 + ADDs 1-5: see HC 16-viii (2007-08),
chapter 9 (16 January 2009). Back
46
(30213) 16097/08: see HC 19-i (2008-09), chapter 4 (10 December
2008) and HC Deb, 20 January 2009, cols. 626-652. Back
47
(30305) 17358/08: see HC 19-vi (2008-09), chapter 10 (28 January
2009). Back
48
(30294) 17537/08 + ADD 1: see HC 19-vi (2008-09), chapter 19 (28
January 2009). Back
49
(30321) 5005/09 + ADDs 1-2: see chapter 11 of this report. Back
50
(30318) 17582/08: see chapter 16 of this report. Back
51
(30310) 17535/08 + Adds 1-2: on which we expect to report shortly. Back
52
(30315) 17568/08: see chapter 16 of this report. Back
53
(30317) 17581/08: on which we expect to report shortly. Back
54
(30279) 17380/08 + ADDs 1-3: on which we expect to report shortly. Back
55
The pharmaceutical sector inquiry is being carried out by the
Directorate General for Competition, as part of its competition
policy - sector inquiry initiative. The inquiry is expected to
publish its final report on its findings in April/May 2009. Back
56
(29422) 5942/08 + ADD 1: see HC 16-xiv (2007-08), chapter 7 (5
March 2008). Back
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