Local Enterprises

CEEP Opinion “For an Inclusive EU SME Policy”, adopted by the CEEP General Assembly on 08 June 2016 – PDF. A short version of the Opinion is also available here.

Executive summary

  • The current European legal definition (Recommendation 2003/361/EC of 6 May 2003) for small and medium-sized enterprises (SMEs) does not encompass the majority of local public services enterprises (LPSEs) from its scope because it excludes enterprises with a public ownership of more than 25%.
  • The SME definition is widely used both in European and national legislation, as well as in EU financing programmes, in response to the EU policy priorities and more recently the Better regulation agenda.
  • However, it appears that the EU SME Definition unnecessarily discriminates against LPSEs for the very nature of their ownership structure. This is notably contrary to article 345 TFEU which states that “The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership”.
  • As a consequence, LPSEs cannot take part in a number of funding and financial schemes. They are also constrained by unnecessary and especially disproportionate regulatory burden from which other SMEs covered by the definition are exempted because of disproportionate costs, and therefore may suffer a disadvantage, especially in areas where they are in competition with private enterprises.
  • Hence, an amendment to the European SME definition is required in order to guarantee equal treatment to all types of SMEs irrespectively of their type of ownership. Should this not be possible or not desired, future reference to the SME definition should exclude Article 3, Paragraph 4 of the Annex to the aforementioned Commission Recommendation.
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