Late payments in commercial transactions: public authorities in the spotlight

Late payments eat into the cash reserves of companies that, in a time of economic crisis, have even less ready cash. This weakens small and medium-sized enterprises (SMEs) in particular. A revision of the late payments directive now being considered by Parliament would help SMEs which rapporteur as to substance Barbara Weiler (S&D, DE) called an "innovative, job-creating source of economic dynamism". Internal Market Committee MEPs debated the revision proposal with 21 representatives of national parliaments on Tuesday.

 

 

According to the European Commission's impact assessment, which the UK's Lord Bownes said lacked representativeness, late payment by public authorities is a major problem for companies. As tabled, the revised directive would therefore impose stricter payment deadlines and penalties on public authorities than on the private sector.

 

A proposed flat-rate penalty of 5% on public authorities (in addition to debt recovery costs) was deemed disproportionate" by all representatives of national parliaments. "2% would be enough", said Titus Pasça of the Romanian Senate.  Eva Högl of the German Bundestag argued that the penalty payment should be incorporated in the debt recovery costs. Jürgen Creutzmann (ALDE, DE), said the payment should be capped. Many MPs and MEPs argued that the penalty should be "stepped" and "gradual", rather than flat rate. Many also criticized the idea of distinguishing between the public and private sectors, a distinction which they said would undermine certainty as to the law and discriminate the public sector (Evelyne Gebhardt, S&D, DE) and be unfair to public service suppliers such as hospitals (Philippe Juvain, EPP, FR), especially as their status is not always clear to entrepreneurs (Hans Peter Mayer EPP, DE). Furthermore, the approach advocated by the Commission does not solve the problem of business to business (B2B) transactions between private enterprises, added Małgorzata Handzlik (EPP, PL).

 

 

Legal Affairs Committee rapporteur Raffaele Baldassarre (EPP, IT), stressed the need to ensure the legal clarity of the proposal, given that certainty as to the law is vital for companies. The Commission representative acknowledged the need to clarify further the proposal's scope, the 30-day payment deadline, and the definition and size of the penalty payment. The specific case of public services such as hospitals and museums also deserve a new approach, she added.

 

This was the first time since the Lisbon Treaty entered into force that national MPs have met an EP committee. The treaty creates a new framework for national MPs to help shape EU legislation - a fact underlined by Malcolm Harbour (ECR, UK) and warmly welcomed by representatives of the Austrian, Belgian, Czech, German, Greek,  Irish, Italian, Lithuanian, Spanish, Polish, Portuguese,  Romanian, Slovene and UK parliaments present in Brussels.  Barbara Weiller (S&D, DE) undertook to take account in her report of their proposals and observations, which "go beyond the opinions stated in the Council by national governments".

 

In the Chair: Malcolm Harbour (ECR, UK) (1st part)

Bernadette Vergnaud (S&D, FR) (second part)