Not cleared from scrutiny; further information awaited
Proposal for a Regulation on cross–border parcel delivery services
Article 114; ordinary legislative procedure; QMV
Business, Energy and Industrial Strategy
(37821), 9706/16 + ADDs 1–6, COM(16) 285
7.1High prices for parcel delivery deter consumers and small businesses from buying and selling cross-border within the EU. Two particular reasons for this market failure have been identified. First, consumers and small businesses lack information about available delivery services, providers and prices. Second, regulation of cross-border parcel delivery is very limited.
7.2As part of its package of measures designed to boost cross-border e-commerce, the Commission proposes a Regulation (9706/16) to increase price transparency for cross-border parcel delivery, improve regulatory oversight of the market, and lower the prices paid by individuals and small businesses, especially in remote areas. The Regulation is described in greater detail below, but consists principally of a requirement that parcel delivery service providers meeting the definition annually submit data to a National Regulatory Authority (NRA), which will in turn provide this data to the Commission, which will publish the tariffs on a dedicated website. Other provisions require the NRA to assess the affordability of these tariffs according to a procedure and to submit this assessment to the Commission, other Member States and relevant competition authorities. Member States must introduce penalties for non-compliance.
7.3In its Explanatory Memorandum on the proposal, the Minister for Small Business, Consumers and Corporate Responsibility (Margot James) indicated that the Government supported the proposal and felt that EU-level action was appropriate given the cross-border nature of the issue. She said that whether the UK would want to retain the legislation after the UK had left the EU was dependent on various unknowns, including the terms of the UK’s future relationship with the EU.
7.4In a letter on 21 April 2017 the Minister provided the Committee with an update on progress in the Council. She outlined a number of UK concerns about the proposal, but explained that the Presidency had produced a text which addressed the majority of these. She asked the Committee to grant a scrutiny waiver in advance of the 9 June Telecoms Council.
7.5Because this request was not received in time the Committee was unable to grant a scrutiny waiver before Parliament was dissolved in advance of the General Election. As a result, the Minister abstained when the General Approach was reached in the Council. The Minister’s letter of 6 July 2017 provides a detailed summary of the main changes to the Commission’s proposal. Crucially, the revised text is adjusted to give “the National Regulatory Authority (NRA) more discretion over which postal items to assess in order to identify the cross-border tariffs that are unreasonably high, unlike the Commission’s proposal which would have required NRAs to carry out a blanket assessment of all tariffs, rather than focus on those which are considered problematic.”
7.6The Minister stated that MEPs had been invited to make amendments to the Commission’s proposal and compromise amendments were being prepared, and noted that the Transport and Tourism Committee was due to vote on this on 11 July. The Minister anticipated the Parliament draft to go much further than that of the Presidency, and for trilogue negotiations to start in the Autumn and for the Regulations to be agreed by December. In the event, the Transport and Tourism Committee rejected the rapporteur’s report, delaying the start of trilogues.
7.7On 10 October 2017 the Transport and Tourism Committee voted to adopt a revised report from the rapporteur, and to open interinstitutional negotiations. Parcel sector representatives were reportedly pleased with the reforms, particularly in relation to the so-called affordability checks, whereas e-commerce trade group EMOTA was more critical of the outcome.
7.8We thank the Minister for her detailed update on the General Approach that was reached at the 9 June Telecoms Council, and welcome her decision not to override the scrutiny reserve resolution.
7.9We note that the European Parliament Transport and Tourism Committee did not pass the rapporteur’s first report on the proposed Regulation, but approved a second report on 10 October 2017. We ask the Minister:
7.10We request that the Government provide the Committee with responses to the above questions, as well as updates in relation to any significant developments, by 13 December 2017. In the meantime we retain this document under scrutiny.
7.11The Commission proposal includes the following elements:
7.12The Commission explained that EU-level action is required because:
“Cross-border delivery by its very nature involves delivery services in more than one Member State and therefore cannot be overseen by national regulatory authorities acting independently of each other and without information about the cost of delivery in other Member States.”
7.13The Government’s Explanatory Memorandum of 15 June 2016 indicated that it supported the proposal because cross-border parcel delivery plays an important role in facilitating the digital economy and building the Single Market. It considers that the proposal helps to:
7.14The Government said that it supported EU-level action because “the establishment of a clear and harmonised framework of cross-border parcel delivery services within the EU will require action at EU level and cannot be achieved by Member States on their own”.
7.15In a subsequent letter dated 10 October 2016, the Minister for Small Business, Consumers and Corporate Responsibility (Margot James) responded to various technical questions posted by the Committee. Regarding Brexit, she said that whether the UK would want to apply the terms of the legislation after the UK had left the EU was dependent on the terms negotiated for the UK in relation to access to the EU Single Market, whether the Digital Single Market formed part of that, and whether the final agreed text of the Regulation met the aims the Government had set out in its original non-paper.
7.16The Minister wrote to the Committee seeking a scrutiny waiver on 21 April 2017 in relation to the Telecoms Council on 9 June, after the deadline provided by the Committee. This did not allow sufficient time for the Committee to consider a paper and grant a scrutiny waiver before Parliament was dissolved.
7.17The Minister outlined the Government’s views in relation to the issues of the definitions (Article 3), the affordability assessment (Article 5), mandated access (Article 6), and the list of items contained in the annex which will be subject to article 4 (price transparency) and article 5 (affordability).
7.18The Minister’s comments on these aspects of the proposal are not reproduced here, as further negotiations took place in advance of the 9 June Telecoms Council, resulting in further modifications.
7.19The Minister wrote again to the Committee on 6 July with an update. A General Approach was reached in relation to the proposal at the Telecoms Council on 9 June. No Member States voted against, as the Presidency’s compromise text had addressed the Council’s main concerns. The UK abstained because the Committee had not granted a scrutiny waiver to vote in Council.
7.20The Government’s four areas of concern are addressed by the Presidency’s final text as follows:
7.21The Minister concludes that “overall, the draft Regulation is now in a much better place than it was originally” but emphasises that the Government retains concerns, particularly “with the provision of information (Article 3).” Although this element of the proposal should have been a relatively straightforward requirement for parcel delivery providers to submit information to the NRA, the Minister says that:
“an additional requirement was introduced in a later draft which requires the parcel delivery provider to also obtain the same ínformation from any subcontractor they work with that has on average 50 persons or more working for them, and to submit that information to the NRA on their behalf. Although well intentioned, this creates a convoluted situation where parcel delivery operators will be required to request information including sensitive business information, from subcontractors, in order to comply with the Regulation.”
7.22On this point (Article 3) the Minister says the Government will work in trilogue “to ensure that a more balanced approach is struck”.
7.23In terms of next steps, the Minister said that the Parliament was considering the Regulation through the Transport and Tourism Committee. Lucy Anderson MEP (UK, Labour) is the Rapporteur. The Minister stated that MEPs had been invited to make amendments to the Commission’s proposal and compromise amendments were being prepared, and noted that they were due to vote on this on 11 July.
7.24The Minister said that she expected the draft from the Parliament to go much further than the Presidency draft, including by attempting to impose an obligation on retailers to make more information available to consumers at the pre-contractual stage including which delivery service is being offered, a choice of provider and an ability to opt out of non-attended delivery. She said that: “We are maintaining dialogue with the European Parliament in order to encourage a balanced, pragmatic approach to the text with a focus on Articles 3 and 5”.
7.25The Minister said that the Government expected trilogue to start in the Autumn with the Regulations agreed by December under the Estonian Presidency.
7.26Contrary to the Minister’s expectation, Lucy Anderson’s report failed to pass in Committee, with 21 MEPs voting in favour and 21 MEPs voting against, with five abstentions. Coverage of the vote stated that:
“The mutiny largely came from the European People’s Party, whose MEPs tried to push the vote back to August or September. One of the key issues? [sic] Article 5, which stipulates assessment criteria for regulators to determine if prices are accurate. Many argued Anderson’s proposed changes were too burdensome for small businesses.”
“But the real resistance came from within Anderson’s own group, the Socialists & Democrats. Controversially in the tied vote, the S&D’s own transport committee coordinator Ismail Ertug opted against Anderson’s report—effectively vetoing it. Ertug told POLITICO he didn’t see the value behind the whole proposal and his support depended on a new compromise for Article 5.”
7.27On 10 October 2017 the Transport and Tourism Committee voted through a revised report. Politico.eu reported that many of those in the parcel sector, which fought hard to ensure the rules are not too cumbersome for postal operators, were pleased with reforms to the so-called affordability checks. However, it also reported that e-commerce operators were less pleased with the result.
33 (Paywall) (13 October 2017)
34 Payments from the originating universal service provider to the destination universal service provider for the costs of cross-border parcel delivery services in the destination Member State.
35 Assessment of affordability will include domestic price comparison and any application of a uniform tariff to two or more Member States, regardless of the specific costs incurred.
36 Letter from Margot James to Sir William Cash
37 Politico, (11 July 2017).
38 Politico, (12 July 2017).
39 (Paywall) (13 October 2017)
28 November 2017