A major topic for European public services and for the quality of services they provide to European citizens, the needed reform of the legal definition of Small- and Medium-sized Enterprises (SMEs) in the EU legal order has gained substantial recognition over the year 2018, not least through the efforts of CEEP and its partners.

Performing Public Services and Services of General Interest (SGIs) not only entails very specific conditions and obligations, it is also operated in many cases by small- or very small-scale structures. Most of these companies “cannot be considered an SME if 25 % or more of the capital or voting rights is directly or indirectly controlled, jointly or individually, by one or more public bodies”, the European Commission’s Recommendation 2003/301/EC states.

As a result, many small-scale enterprises fall out of the remit of public policies specifically designed to address the specific needs of private-sector SMEs – despite sharing their condition of e.g. scarce financial and human resources or limited administrative capacity. The situation is all-the-more damaging as, per definition, all these companies provide services vital to economic activity and social cohesion alike, from public health to water and energy supply. Moreover, the number of such structures amounts to about 25.000 EU-wide (to-be-compared to about 23 million private-sector SMEs…). In other words, enlarging the legal SME definition to them, thus enabling them to benefit a range of SME-specific policies, tools and frameworks, should lead to a hardly perceptible impact on other SMEs, if at all. A comprehensive overview of arguments in favour of tackling this loophole as well as a summary are respectively accessible here and here.

Whereas this shortcoming of European legislation was widely “below the radar screen” of EU politics, CEEP’s efforts in raising public awareness appear to have a first impact by rallying official support from important decision-makers across EU institutions. This support took the shape of, e.g. a breakfast discussion organised in the European Parliament’s premises, a conference officially hosted and attended by the President of the European Committee of the Regions Karl-Heinz Lambertz, a Resolution of the European Parliament stressing the need for action from the EU executive body (see Art. 16), a CEEP response to a public consultation organised by the European Commission…

The quite specific timing of this European legislature’s end made an actual reform of the SME legal definition before European elections of May 2019 impossible. The decision will therefore logically depend on the future political majority in the European Parliament and the Commission based upon it. The political ground, however, is prepared and CEEP will remain committed towards this necessary step.

CEEP’s Policy Officer for Public Services Alexis Le Coutour (alexis.lecoutour@ceep.eu) remains at your disposal for any further question.

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