Subsidiarity assessment of the Commission's proposal for a regulation on combating late payments in business transactions

Jennie Wernäng (M)

Madam Speaker! On September 12 this year, the Commission presented a proposal for a regulation on combating late payments in commercial transactions. In the Commission's evaluation of the applicability of the 2016 directive, it appears that late payments in trade transactions are a problem. The Commission considers that stricter rules are needed to address this.

Madam Speaker! The proposal that came to our table concerns that the length of the payment period for all commercial transactions, both in relations between businesses and in relations between businesses and the public sector, may not be longer than 30 days. Furthermore, the creditor shall not be able to waive their right to default interest and late payment compensation. In addition to this, the payment period shall also apply to the delivery of agricultural and food products that are not fresh produce according to EU Directive 2019/633, unless the Member States have stated otherwise.

Furthermore, a fixed interest rate for the default interest is proposed, namely the member states' reference rate plus 8 percentage points. All of this is topped off with that, to the greatest extent possible, digital tools must be used as well as ensuring education in financial knowledge for small and medium-sized enterprises as well as credit management tools.

Madam Speaker! With this said, I do not question the need for rules at the EU level to promote and improve the conditions for operating and developing business activities, nor do I question that late payments create problems. On the contrary, I completely agree. This is more about the fact that the measures are very detailed and create restrictions for all parties. I will list the details again:

compulsory payment period

fast delay interest

that the pledgee shall not be able to waive its right to default interest and late payment compensation

All this makes us consider that the measures go too far, limit freedom of contract, and restrict the possibility for companies to mutually agree on payment time, interest rate, and default interest. We also question whether it is justified with a regulation in this area. This needs to be analyzed further.

Accordingly, the proposal is not considered to be compatible with the subsidiarity principle in all parts, and I therefore wish to move for approval of the committee's proposal.

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Markus Kallifatides (S)

Madam Speaker! The market economy must both be tamed and nurtured in the people's interest. In the wrong hands, the market undermines itself. We Social Democrats have known this ever since Hjalmar Brantings days.

Late payments are something that affects primarily small and medium-sized enterprises throughout the European Union. A fundamental cause of late payments is the difference in bargaining position between a large customer and a smaller supplier, and the consequence is often that the supplier is forced to accept unreasonable payment terms. Long payment periods entail a strain on companies' liquidity and profitability, which can affect the competitiveness of primarily small and medium-sized enterprises.

That is why it is important to take sharp measures to curb late payments and improve payment discipline in commercial transactions. Accordingly, we Social Democrats, in line with the European Commission, believe that strict and coordinated rules are needed to improve payment behavior in business transactions within the single market. In our opinion, the Commission's proposal does not go beyond what is necessary, and we therefore do not consider the proposal to conflict with the principle of subsidiarity. Therefore, Madam Speaker, I move for approval of reservation 1.

I want to further remind that what we have to take a position on today is a subsidiarity test. The Swedish Riksdag has to take a position on whether a proposal from the EU Commission conflicts with the EU treaties. It is therefore not about taking a position on the merits or on the question of whether the Commission's proposal should be implemented or not in its current form. For the listener who wishes to inform themselves more about what a subsidiarity test actually entails, I refer to the Committee on the Constitution's very extensive reports on the subject.

Within the framework of this subsidiarity test, the committee majority, with the Sweden Democrats, the Moderates, the Christian Democrats, and the Liberals, do not in themselves question the need for a regulation at the EU level to promote faster payments. The committee majority does, however, question whether a regulation in the area is justified.

Furthermore, the committee majority considers that certain parts of the proposal go beyond what is necessary to achieve the desired goals of the Commission's proposal. It concerns the fact that the proposal would "restrict freedom of contract", among other things by restricting the possibility for companies to mutually agree on the payment period and the interest rate for default interest.

Madam Speaker! I note that neither the government in its fact memorandum nor the committee majority has presented any description of how the objectives formulated by the European Commission for its proposal for an EU regulation would be reached in any other way than the proposed one, that is, through a regulation, which in turn becomes applicable law throughout the European Union. An EU directive, which only sets requirements for the harmonization of different national regulatory frameworks, we have had since 2011, Madam Speaker. This directive has been evaluated, and the conclusion has been drawn that a directive alone has not functioned.

Furthermore, neither the government nor the committee majority has explained in what or which other ways the set goals could be achieved if the payment period or the interest rate for default interest is not regulated in the proposed EU regulation. They speak in general terms that new rules "should build on freedom of contract and balance the interests of the parties. The starting point should be that existing EU instruments are implemented correctly and effectively before new measures are proposed."

Madam Speaker! Combating late payments is about preventing the market economy from diminishing its potential. This initiative contributes to innovation and economic growth through a better business climate in the internal market.

Combating late payments also has beneficial effects for the public sector. There will be fewer bankruptcies, and the associated costs for the treasury will be lower.

Combating late payments involves a significant simplification of rules. It will result in the same clear rules for payments in business transactions throughout the EU. Simple!

Here in the Riksdag, we Social Democrats have pushed the issue of late payments at least since 2012. I take the liberty of quoting from a Social Democratic motion on the subject from that time: "Freedom of contract is important, but it is always limited by the frameworks that society sets for the market economy. If the efficiency of the market economy is improved through shorter payment times and the opportunities for more jobs thereby increase, it is reasonable to consider relevant measures. Small and medium-sized enterprises often have tangible problems with both financing and liquidity, not least during the initial period. To now improve the situation for small companies in these respects is particularly important against the background of the warnings and the rising unemployment that we receive reports of daily."

I also want everyone to know that the Riksdag, in the processing of the Social Democratic motion 2012, approved our reservation and made the following announcement: ".simultaneously urges the government to return with proposals that further strengthen the position of small and medium-sized enterprises regarding payment times".

The reason our proposal won the Riksdag's approval that time was that SD voted for it, while the current government parties voted against it. But now, SD has changed sides and no longer stands on the side of small and medium-sized enterprises.

We Social Democrats welcome that the work can continue to improve the conditions for small and medium-sized enterprises throughout the European Union. I want many hard-working entrepreneurs and their employees all over Sweden to know that.

(Applause)

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Lili André (KD)

Madam Speaker! The subsidiarity principle is a fundamental principle within the EU which means that decisions should be taken as close to the citizens, companies, and organizations as possible and that the EU should only act when measures at the Union level provide more effect than measures decided at national, regional, or local level.

Today we have a matter where the main objective of the Commission's proposal is to reduce the number of late payments in trade transactions in order to strengthen the competitiveness of small and medium-sized enterprises and thereby contribute to a well-functioning internal market. But, Madam Speaker, there are very many other things that can be done instead of standardizing agreements between businesses. That long payment periods are a problem for companies is a fact. But red tape, complicating rules, piracy and inefficient authorities are a bigger problem that we should look at before making even more regulations from the EU. It is something that should instead be handled at the national level.

Madam Speaker! We Christian Democrats do not question the need for regulation at the EU level to promote faster payments. We question whether it is justified with a regulation in this area. Furthermore, we believe that certain parts of the proposal go beyond what is necessary to achieve the desired goal of the Commission's proposal.

The proposal from the Commission is that the maximum payment period for an invoice shall be 30 days in the entire EU. We, the Christian Democrats, consider this to be a matter for each individual nation to decide on. We emphasize the importance of the right decision at the right place, and in this matter, the right place is precisely the national level. Consequently, we, the Christian Democrats, consider that the proposal is not in all parts compatible with the subsidiarity principle. This needs to be analyzed more closely.

I vote in favor of the committee's proposal for a decision.

The deliberation was hereby concluded.

(Decisions were made under § 20.)

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