Digital Single Market: 1 rule, 28 regulators

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30 June, 2015

The European Commission is clear: the Digital Single Market creates jobs and economic growth and lays the foundation for a larger European share in the global tech and Internet market. This ambition is supported widely: a true Digital Single Market stimulates start-ups and scale-ups to grow big so they can actually compete with companies from the US and China. This requires Europe to stimulate opportunities, not erecting barriers for companies from outside Europe.

To encourage these opportunities and make Europe one digital market, we need to move away from differences in national legislation, for example, on consumer rights and (online) privacy. Now it is quite common for Member States to add rules on top of European legislation. The cookie law in the Netherlands is a prime example. It is also very tempting to include again in national legislation own benefits that did not stand in the negotiations in Brussels.

The Commission has noticed this need too and therefore has announced ambitious plans to harmonize existing European legislation for the Digital Single Market or, if that proves to be very difficult, to ensure that EU countries recognize one another’s laws. With only one goal: entrepreneurs in the digital domain need not comply with 28 different rules, but should comply with one rule that applies throughout the EU. This makes cross-border digital business a lot easier and cheaper.

However, in practice we need more than just an alignment of legislation. Regulators on privacy, consumer protection and competition are organized nationally. Their rulings take local conditions into account and therefore interpret rules. National regulators have an important task, but are these local conditions really that different? When in every country the regulator keeps supervising companies on its own way, then there is a huge risk that harmonization turns into fragmentation again. Therefore, Europe will not become a Digital Single Market without the coordination of regulators.

There are already several examples of regulators that tumble over each other. Businesses, of course, must comply with EU legislation and will abide by decisions and agreements with their regulator. But it does not help if regulators one another think differently on rules and create legal uncertainty because they interpret them slightly different. And the smaller the enterprise, the bigger supervisory fragmentation becomes an obstacle for cross-border business. Especially for start-ups.

Besides harmonization of legislation, Europe therefore also needs to put a better system of coordination between regulators on its agenda. This gives businesses certainty and ensures that they need not worry about 28 different supervisory regimes. Then when disagreements between regulators are being fought on the backs of businesses, Europe will never be the Digital Single Market that it aspires.

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Bart Pegge

Director Public Affairs Practice

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