Welcome to Better Europe’s weekly update on EU Affairs.
THE EU’S NEW MOTTO: GROW FIRST, COMPLY LATER
In a move seen as a boost for business, but likely to raise eyebrows among environmental and data rights advocates, the Commission this week unveiled a new category of companies, the “small mid-caps”, in its fourth “simplification” proposal Omnibus IV. Instead of stretching the SME definitions are previously considered, 38 000 companies in Europe with up to 750 staff and 150 million euro turnover will benefit from major reporting exemptions across eight EU laws. By also applying the current SME exemptions in these laws to “SMCs”, only some 10 000 companies will be left to actually (fully) comply. Internal Market Commissioner Stéphane Séjourné praised the initiative as the EU’s “most significant economic strategy” to date, arguing that fast-growing businesses currently suffer a “regulatory shock” when they scale up. The exemptions cover a wide set of EU rules, including data privacy (GDPR), listing on financial markets (MiFID), and the Batteries Regulation. The move toward deregulation comes amid mounting industry pressure and a growing narrative – particularly from the French government – that the EU’s competitiveness is being held back by overregulation. This push has already raised concerns among environmental and human rights groups, who warn that “simplification” could lead to overlooking essential safeguards.
MACRON AND MERZ TEAM UP TO KILL DUE DILIGENCE
Due Diligence requirements have been put on the political chopping block this week as France mirrors Germany’s firm request to stop the law. A week after Merz demanded that the CSDDD be completely scrapped, Macron, on 19 May, followed suit and publicly called for the directive’s death at a “Choose France” business conference. The statement comes after the directive’s transposition and first phase application deadline were already postponed by a year, to July 2027, through the appropriately labelled “stop-the-clock” directive. By proposing that the directive be taken off the table completely, Europe’s most powerful leaders join the far-right’s positioning, even though their own parties, the EPP and Renew, remain on the “simplifying” track. Until recently, Member State divisions on the Polish Presidency’s second compromise text related to guidance versus penalties in ensuring harmonized application. It remains to be seen if the statements by Paris and Berlin are genuine or just seek to up their negotiating hand, but as the 2 biggest member states stand aligned, many countries are expected to follow in their footsteps.
NO NEED TO REGULATE MUSHROOM EXPERTS
This week, competitiveness ministers gathered in Brussels with a familiar agenda: fixing the single market and ensuring that public procurement actually works. At the heart of the discussions lies the Commission’s new Single Market Strategy, presented by EVP Stéphane Séjourné. Designed as a response to geopolitical concerns and sluggish EU standards and highly inspired by the Letta report, the roadmap provides more of a diagnosis than a solution. With ten barriers to business identified, ranging from red tape for posted workers to the infamous “mushroom expert” professions, the Commission is planning targeted action through current and future omnibus packages. Public procurement was also on the table, and it’s being rethought from how we buy to what and why we buy. Public procurement should align with Europe’s strategic interests, boost transparency, and serve as a tool to support economic objectives, not just be a transactional process.