After years of the so-called “Green Deal”, the EU Commission has become aware of the extent of the bureaucracy it has created. Therefore, on 29 January 2025, the Commission presented its programme for the next five years, “A Competitiveness Compass for the EU”.
The 26-page document reads promisingly in places from the perspective of small and medium-sized companies, but it does not go into much detail. The first more specific plans concerning the selected requirements for companies are expected from 26 February 2025 in the context of the “Omnibus Regulation” to streamline the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The VERE e.V. association summarises below the contents of the Competitiveness Compass that are of particular interest to sellers and producers:
Competitiveness Compass Summary
- Harmonised EU-wide rulebook: The Commission will propose a 28th legal system that simplifies the rules that apply, rather than dealing with 27 different legal systems. However, the 28th legal system is initially only mentioned in connection with company law, insolvency, labour and tax law.
- A Commissioner for Implementation and Simplification will coordinate the work of the Commission in this area and lead a screening of the EU acquis to identify opportunities for simplification, consolidation and codification of legislation.
- Each Commissioner will hold regular implementation dialogues twice a year with stakeholders to understand implementation problems, listen to business concerns and identify opportunities for simplification and reducing administrative burdens.
- Reality checks, carried out by Commission services with stakeholders, will further support stress tests of EU regulation.
- Simplification must be based on an understanding of how value chains work in practice and a regulatory system that relies on trust and incentives rather than detailed control.
- The Commission will present its overall approach next month. This Commission will undertake an unprecedented simplification effort. The aim is to achieve the agreed policy objectives in the simplest, most targeted, effective and least burdensome way.
- To ensure a sustained and measurable effort in the years to come, the Commission has set ambitious quantified targets for reducing the reporting burden: at least 25% for all companies and at least 35% for SMEs. The reporting burden is one part of all administrative burdens. To further raise the ambition, the 25% and 35% targets for reducing the burden should in future relate to the costs of all administrative burdens and not just to reporting obligations.
- Omnibus packages: The target of 35% is to be achieved with targeted measures for SMEs. This will start next month with the first in a series of “Omnibus” simplification packages. The first Omnibus packagewill include, among other things, a wide-ranging simplification in the areas of sustainable finance reporting, sustainability due diligence and taxonomy. See also the report Omnibus Regulation on 26/02/2025 by trade-e-bility.
- It will in particular address the trickle-down effect, to prevent smaller businesses along supply chains from being exposed to excessive reporting requirements in practice that were never intended by the legislator.
- To ensure proportionate regulation in line with company size, a new definition for small mid-caps will be proposed shortly. By creating such a new company category, larger than SMEs but smaller than large companies, thousands of EU companies will benefit from tailored regulatory simplification, in line with the SME spirit.
- The Commission is also preparing to simplify the Carbon Border Adjustment Mechanism for smaller marketparticipants. Throughout the year and throughout the mandate, the Commission will continue to put forward simplification measures based on the dialogue with stakeholders.
- The revision of the REACH regulation will cover the existing acquis and new initiatives on chemicals, bringing real simplification on the ground and ensuring faster decision-making on key hazards, as well as sustainability, competitiveness, safety and security.
- A new SME and competitiveness proofing in impact assessments will become a stronger filter for new initiatives, also assessing the expected impact on cost differentials compared to international competitors. Greater attention will be paid to assessing the costs of proposed delegated and implementing acts where appropriate.
- The use of digital tools and AI to support simplification efforts at the government level must be facilitated, with full cross-border interoperability between public sector solutions such as e-invoicing, e-signature, e-filing and digital product passports.
- To ensure a level playing field across the single market and to combat fragmentation and overregulation, the Commission will take a robust approach to full harmonisation and enforcement.
- In addition to the work on simplifying record-keeping obligations under the General Data Protection Regulation, the Commission will continue its work on more uniform implementation and enforcement. All EU institutions must work together to avoid a “regulatory ratchet”.
- The commitment to better regulation must be shared by all institutions throughout the entire legislative process, while respecting the principles of subsidiarity and proportionality. Through cooperation with the European Parliament and the Council, a revised interinstitutional agreement will ensure that the commitment to simplification and the focus on implementation are maintained throughout the entire legislative process.
The VERE Association will keep you informed about further developments regarding the EU Competition Compass. Would you also like to have your interests represented by a strong SME association? Then join our VERE Association today: thanks to our many thousands of members, the annual membership fee is only €25.00 plus VAT (can be cancelled annually). You can find the VERE membership application here:
