Policing of EU market rules drops under von der Leyen’s commission

Financial Times analysis shows European Commission action against internal market infringements by member states fell 80 per cent from 2020 to 2022, the first three years of von der Leyen’s term as president, when compared with the corresponding period under her predecessor Jean-Claude Juncker.

Failing to uphold single market rules — set up to ensure the free movement of goods, capital, services and people across the bloc — can lead to member states adopting different standards that gum up cross-border business and hamper competition with rivals in the US and China.

Kone, a Finnish lift manufacturer, which operates in 60 countries, has warned that a lack of commission oversight of the main EU directive on lifts has contributed to varied national regimes emerging for producers.

“The more we can do the same product across all countries, it’s better for consumers because you have slightly lower costs,” said Kone’s chief executive, Henrik Ehrnrooth. “The standards should be set by Europe. If they are not clear that void will be filled [by member states].”

Business groups have also warned about signs of increasing protectionism from national governments.

A commission document presented to member states in February and seen by the FT shows that barriers to retail businesses have increased in countries including Hungary, Germany, Belgium and Poland since 2018, with France having the most restrictive conditions.

These include extra hurdles on sourcing goods from other member states, an apparent contravention of rules on the free movement of goods.

On top of infringements by member states, some businesses are also calling for more active enforcement to prevent allegedly anti-competitive practices by companies.

Ahold Delhaize, a Netherlands-headquartered supermarket active across seven European countries, said it regularly noticed different purchase prices on branded products made in the same factories but sold in different countries.

“We cannot explain these price differences,” said Wouter Kolk, chief executive of the retailer’s Europe and Indonesia divisions. “If the EU were to introduce single market legislation that would allow retailers to buy at a European level, consumer prices would benefit significantly.”

Infringement actions recorded by the commission can include formal warnings, financial sanctions or referrals to the European Court of Justice.

Commission enforcement can fluctuate because of new directives being introduced and states failing to meet new rules. The commission also issued a communication in 2016 that outlined a “more strategic approach to enforcement”, focusing on cases with single market relevance and economic importance.

The commission said it that fewer infringement decisions “taken alone are not an appropriate measure of the commission’s enforcement efforts”.

More use of a structured, problem-solving dialogue system between member states and the commission, known as EU Pilot, had also helped lower cases, the commission said in its latest report on infringements in 2021.

In 2023, 51 decisions have been passed on internal market-related infringements, excluding case closures. This is already more than double the total in 2022, as the von der Leyen commission edges towards the end of its term in 2024.

But just seven of 246 cases launched through the EU Pilot scheme in 2021 concerned the internal market and related categories. At the end of 2021 a total of 1,930 infringement cases were open across all policy areas, compared with 1,564 at the end of 2019, the start of von der Leyen’s tenure.

“A less generous interpretation [of the fall in infringements] is that the commission simply did not launch difficult cases,” said Lasse Hamilton Heidemann, senior director at Dansk Erhverv, Denmark’s chamber of commerce.

Rulings on single market rules are often left with national courts. In 2016, a Slovakian medicines trader approached the commission with a complaint against a national law that gave manufacturers the ability to withhold permission for exports to maintain national supplies.

According to a document seen by the FT, the commission stated that Slovakian restrictions were not “appropriate and necessary” in a 2018 letter but declined to take up the case further, citing its “discretionary power” to focus on “strategic” cases.

The dispute is still stuck in Slovakian courts, according to Kasper Ernest, secretary-general of Affordable Medicines Europe, a body representing medicines traders who brought the case. “The commission needs to start recognising that if you continue like this you will have so many disappointed business people,” he said.

Beyond frustrated businesses, member states warned that the bloc’s international weight was at risk if the long-term health of the market was not addressed.

A commission document marking the single market’s 30th anniversary last month hailed it as “one of the greatest achievements of the EU”. It has boosted gross domestic product for EU countries by about 9 per cent than would otherwise be the case, the commission said.

Citing “tunnel vision” on crises, one official from a member state said: “We can’t do geopolitics without the internal market: it’s what drives our competitiveness.”

“The commission has had short-term concerns with Covid, Ukraine and Brexit,” another member-state official said. “The focus now has to be on the single market.”

By Ian Johnston