Verbatim report of proceedings

Wednesday, 11 October 2006 - Brussels

20. Follow-up to the report on competition in professional services (debate)

  President. The next item is the report (A6-0272/2006) by Mr Ehler, on behalf of the Committee on Economic and Monetary Affairs, on follow-up to the report on competition in professional services (2006/2137(INI)).

  Jan Christian Ehler (PPE-DE), rapporteur. – (DE) Mr President, Commissioner, ladies and gentlemen, by presenting a report in September of last year on professional services under the heading ‘Scope for more reform’, the Commission has actually expanded on the report it had already drawn up back in 2004 on the topic of competition in professional services. Parliament expressed its views on this on the basis of the reports from 2001 and 2003. In March of this year, the Committee on Legal Affairs and this House again positioned themselves in relation to the special sector of legal professions.

What links all public discussions, between economists, as well as between Parliament and the Commission, is a significant phenomenon: all participants have extremely forthright opinions but are weak when it comes to figures. The figures which form the basis of the mainly sector-specific or national investigations largely date from the early 90s. The most recent investigation dates from the start of 2001. What unites all of the investigations, however, is the fact that they are either limited to specific sectors or nationally or that they are founded precisely on an empirical basis which basically goes so far back that it is barely suitable for generalisation purposes.

Viewed rationally, the economic importance of the services cannot be overestimated. 8% of European GDP is made up of business services, of which at least one third can be attributed to professional services. In this respect, and I believe that Parliament also welcomes this in the context of the Lisbon agenda, it is entirely justified asking what contribution this sector may make to growth and employment in Europe. It seemed important to us to not just approve the Lisbon agenda using nice speeches but to also get involved in this specific instance in the question as to what contribution liberalisation can make to growth.

The Commission should be commended in bringing some sort of order to a discussion which hitherto, I should say, has run wild. Basically, the Commission has made the following economic consideration: First of all, it has looked at six professions: lawyers, notaries, engineers, architects, pharmacists and accountants. It has defined five restrictions on competition (fixed prices, recommended prices, rules of competition, advertising rules and the entire gamete of entry restrictions, business structures and merger practices). The Commission has put forward four large categories of consumer for comparison purposes – public authorities, large enterprises, small- and medium-sized enterprises and private consumers – and then acknowledged that certain special regulations apply here given the presence of asymmetries – in the sphere of market transparency, as far as externalities are concerned, or on the issue as to what extent a public good is furnished here.

This rationalisation is welcomed. It enables discussions to proceed and makes it logical for Parliament to position itself in relation to this discussion at this time. For our part, we have tried, on the one hand, to lend a degree of support, but also, on the other, to contribute to differentiation as regards this discussion. First of all, it needs to be emphasised that there is a large amount of agreement on the theme of subsidiarity. The difficult task of achieving coordination between Member States on this subject will fall to the European Community. We have requested, on the other hand, and I consider this to be extremely important, also as a result of the discussion on the Services Directive, that the objectives of liberalisation are clearly named and empirical evidence produced too. What level of growth is expected from which liberalisations? What is the desired impact on employment? This also really needs to be stated in terms of figures, otherwise there will not be sufficient acceptance in the Member States. We have emphasised that we see self-administration having equal status vis-à-vis state regulation. We have said we believe that we must differentiate between this system. By way of example, we must distinguish between public authorities because there is a difference between whether a small community invites tenders or whether a nation state invites tenders for professional services. We have stated that whilst we recognise the geographical and traditional conditions, we view them as special regulations which do not obviate the necessity of continual analysis in these sectors as to what opportunities for liberalisation and growth exist there. We have stated in no uncertain terms that we consider special regulations regarding mergers and advertising to be dubious. We have stated that we want to differentiate clearly between certain restrictions on competition according to categories of consumers and finally, we have stated that in the very area of voluntariness, the voluntary Code of Conduct for professional services is very welcome indeed.

The crux of the matter is that we want to go back to the Commission saying that we welcome these observations. It must also be stated categorically, however, that rationalisation, further differentiation in these areas, is required. Only then will the necessary acceptance be achieved in the nation states.

  Neelie Kroes, Member of the Commission. Mr President, I would like to thank Dr Ehler and the Committee on Economic and Monetary Affairs for this report. The Commission welcomes your support for the work that needs to be done in the sector. Your assessment of the importance of professional services to the EU economy is welcome and pertinent. Reform by Member States in this sector must be an integral part of delivering the Lisbon and Better Regulation agendas.

The Commission fully supports your call for us all to work together constructively. We agree, too, that is important to learn from the experience of Member States which have already taken steps to modernise. We think you are right to insist that Member States eliminate special advertising and business structure restrictions and ensure fair and equal access to the professions, including eliminating geographic and demographic rules on entry.

Your call for more economic evidence is a fair one, but let us not forget that we are not proposing harmonisation of regulation in the professions. Member States remain free to determine regulatory solutions based on national needs and circumstances. So our experience is that the best way to add value is through historical and international comparisons. And that is why we have commissioned another piece of external comparative research to look at the EU property services market – selling and buying property. That study will evaluate the impact of professional regulation on consumer choice, price, quality and other important indicators and, where feasible, the effect on jobs and growth.

National authorities can also play an important role in evaluating the impact of reforms already undertaken. They, along with key stakeholders, such as professional bodies, are likewise well placed to evaluate the current state of regulation of the professions in their countries, explore what can be modernised and evaluate the impact of possible reforms on growth and jobs.

  Donata Gottardi, on behalf of the PSE Group. – (IT) Mr President, ladies and gentlemen, the professions make up one of the areas of excellence in the provision of services. In the majority of European countries, although not in all of them, basic regulation dates back to the codification of civil law on contracts. Obviously this is primarily in civil law countries. Over time, the professions have become the jewel in the crown of civil society, but often also a conservative and closed field, risking the loss of their outstanding quality in order to keep their privileges. In this way, in some countries and in some sectors a closed caste has been created, often inaccessible on the basis of merit, but increasingly and all too often based solely on the hereditary line.

The European Parliament has been asked to reflect on the issue of services in the internal market, and will vote tomorrow on the report on competition in professional services. This year as never before, therefore, it is laying the foundations for finding a balance between, on the one hand, opening up to competition and therefore liberalising access, with particular attention to young people at the end of their training, and, on the other hand, safeguarding the quality of service, not least to protect European citizens. It is also laying the foundations for defining a reference legal framework, identifying critical points to be removed, principles to be respected and procedures to be followed for reference checks; a legal framework within which Member States will be free to make decisions, fully in accordance with the principle of subsidiarity, which has also been mentioned earlier. The text is the result of constructive work by the various political groups. I would like to thank the rapporteur for his willingness in practice to discuss and accept the majority of the amendments, many of which were submitted by the Socialist Group in the European Parliament.

Parliament is adopting a clear stand with regard to the services sector: it wants to gradually remove regulatory barriers and obstacles, not because it has an uncritical, sceptical attitude that cannot tolerate red tape and wants to dismantle the existing system, but rather so that it can encourage that positive competition and openness to transparency and innovation that is a fundamental part of sustainable economic growth and consumer protection. Regulation and self-regulation in the professional services sector must be in line with the Lisbon Strategy, in particular with the protection of the general interest, and must not result in discrimination, particularly discrimination on grounds of race, ethnic origin, nationality or gender.

The proposals contained in the report are a move in that direction, and include: the promotion of codes of conduct, with a decisive role assigned to all stakeholders, not least through representative organisations; importance given to removing bans on advertising, which is seen as a genuine information service for consumers, in particular regarding the nature and cost of services; support for establishing inter-professional and multidisciplinary services to encourage innovation and competitiveness in an ever more complex world; and focus on creating conditions to ease the transition from university education to professional practice.

I hope that there will be support for the amendment we are submitting to Parliament asking Member States to abolish the system of fixed or minimum fees and the ban on negotiating payment linked to the outcome achieved, where they act as obstacles to the quality of services and to competition. I believe that there is still a long way to go, and that the Member States must look within themselves to find the best possible combination of respect for tradition and innovative development of professional services, a key factor in developing the productive system and the social market economy that characterises Europe in a globalised world.

  Alfonso Andria, on behalf of the ALDE Group. – (IT) Mr President, Commissioner, ladies and gentlemen, the desirability of reforming the professions in Europe has been discussed since time immemorial. There are contrasting opinions on this. Some people, including the former Commissioner for competition, Mario Monti, have always come out in favour of what they describe as necessary liberalisation, within a general framework of reform geared towards revitalising the European economy. Others, however, maintain that the current system guarantees citizens a certain level of quality of service and should therefore be retained.

I personally recognise the importance of professional services as drivers of European economic growth, and I agree with the rapporteur on the need to begin a process of reform of the sector, aimed at liberalising professional services. Excessive regulation, rigid fees, few professional organisations, and even fewer multidisciplinary organisations, as well as advertising restrictions, act as an obstacle to revitalising competitiveness in Europe and often do not allow a high level of quality of services to be ensured.

All of that must also be seen from the point of view of paying greater attention to protecting citizens. It is citizens that we as MEPs are called on to represent, and citizens that benefit from professional services. In many regions, the interest of users is often sacrificed to the rewards of position. Situations of oligopoly, where sometimes it would not be strictly true to speak of monopoly, result in higher prices for professional services and cause an added cost that is invariably passed on to consumers. Furthermore, I agree with the rapporteur that it is appropriate to dispense with special regulations in the field of advertising, in order to allow professionals to inform users of the services offered and the relevant prices. On the other hand, I do of course believe that a regulatory effort is needed to strengthen the bans on misleading advertising and to provide instruments for the practical protection of consumers/users.

In conclusion, from the point of view of reconciling the need for greater competitiveness in professional services, through liberalisation, with consumer protection, I support the rapporteur’s worthwhile proposal on the adoption of codes of conduct and self-regulation. I would therefore like to congratulate Mr Ehler once again on his excellent work.

  Johannes Blokland, on behalf of the IND/DEM Group. – (NL) Mr President, it is not self-evident that competition in the liberal professions should be unlimited, and that is once again demonstrated by the Ehler report, and also by practical experience. In the Netherlands, for example, fixed prices for notarial services have been abolished, while many other rules have remained intact. Those rules are needed to guarantee quality. I was approached very recently, for example, with the question by a remedial educationalist who wanted to establish himself freely without going through the usual registration procedure with the Ministry of Public Health. The government was right to prescribe additional requirements in terms of training for registration and compensation, something that is, of course, vitally important for public health services.

The registration requirements for different professional groups still form an obstacle to establishing oneself in a liberal profession, and there are, to some extent, good reasons for this. The guarantee for professional services cannot be made if people can set up in a liberal profession without any restrictions. The rapporteur’s amendment aimed at drawing this subtle distinction in the report is therefore necessary.

  Andreas Mölzer (NI). – (DE) Mr President, it is certainly to be welcomed if partly antiquated professional codes of conduct are reviewed in terms of their necessity in the case of independent professions. In my opinion, however, it is not a question of deregulating all the sectors affected in the same way, irrespective of their different nature. It is known that independent professions provide high-quality services which are in the public interest. In my view, we should not undertake any experiments in this area. The fact that in Argentina and France, for instance, second thoughts are being given to the reintroduction of statutory tariffs for notaries shows that deregulation is not perfect. A sharp increase in the number of lawyers with a simultaneous relaxation in the Fees Ordinance has led to a situation in Germany, for instance, whereby highly qualified legal advice is only offered at staggeringly high hourly rates while at the lower end of the market, a great many lawyers work for rock bottom prices. It is paradoxical if the Commission intends, on the one hand, to limit occupational rights but, on the other, is calling for codes of conduct to be drawn up and the introduction of new quality controls following the abolition of regulatory measures.

  Neelie Kroes, Member of the Commission. Thank you, Mr President, for a stimulating debate. I would like to respond to a couple of the most important issues that have been raised.

Mr Ehler called for better economic analysis of the impact of changes on jobs and growth – and rightly so. On assessing the economic impact of reforms: as I mentioned, the fact there are no plans to harmonise professional regulation across the EU means it would be very difficult to predict impact accurately.

We favour comparative assessment of what differences real changes have actually made on the ground in the Member States that have already introduced them. That is why we see a strong role for the national authorities, which are well placed when they undertake these analyses, but we will also further reflect on what more we might do to facilitate the building of the economic evidence base at EU level.

Talking about liberal professions, such as lawyer, requires tough ethical rules and qualities. The Commission fully accepts that genuine ethical rules are essential to ensure good governance and practice in professions such as lawyer. In this respect, one standard should apply no matter to whom the services are provided: fixing prices or banning advertising do not deliver high ethical standards and good quality services. Quality and observance of ethical standards are better ensured and controlled by adequate training requirements and by effective supervision by the States and/or by professional bodies, including effective complaints procedures for clients. Codes of conduct, as mentioned here, also represent a positive step.

The Commission supports the removal of fixed and minimum prices and the use of result-based fees. There is no evidence to suggest that in the Member States where fixed and minimum prices have been removed there has been a deterioration in the quality or ethical standards of legal services. Though quality has a price, a fixed price does not in itself guarantee quality. Price competition with the possibility of undercutting fixed minimum fees and the use of success fees will, rather, enhance access to justice.

  President. The debate is closed.

The vote will take place tomorrow at 11 a.m.