Commission hopes drive for simpler regulation will boost innovation

The European Commission is hoping for an innovation dividend as it pushes through reforms intended to simplify EU business regulations. 

“We need [. . .] to be very careful about our regulatory footprint and to what extent it could, rather than stimulate innovation, hinder, slow down innovation,” said Marc Lemaître, head of the European Commission’s research directorate general, at the European Business Summit in Brussels on November 18.

He gave the EU regulation on information privacy, also known as GDPR, as an example.

“GDPR has been a gold standard [. . .] for personal data protection, and privacy rights generally,” he said. “We don’t want to just get rid of that. But we want to make these protections more innovation friendly, in the sense that data could still, in an anonymised form, be used, because data is the fuel of artificial intelligence.”

This is all the more important given the increasing speed of technological innovation cycles, which have raised the cost of “a bad blocking regulation,” Lemaître went on. “We need to revisit the rulebooks as we have them today, and we need to find every single element that can be simplified or gotten rid of,” he said. 

He added that the Commission was “dead serious” about scrapping reporting obligations by at least 25% for all businesses, and by at least 35% for SMEs.

Predictability benefits

Where regulations propose significant changes, the emphasis should be on “the benefits of predictability” through clear targets, Lemaître said. He cited as an example the end of new internal combustion engine vehicle sales in Europe in 2035.

“Such a target, which is clear, which is not tomorrow, which gives time to adjust, is really vital for the kinds of transitions that we have to go through,” he said.

Speaking on the same panel, Sander van Donk, vice-president for Europe at US specialty chemicals company Lubrizol, disputed this example. Yes, it was important for businesses to have predictable regulations to position themselves on the long term, but in this case there was a risk of automotive site closures and job losses to China.

“It’s been a long time that the Chinese can produce internal combustion engines more cheaply than Europe, and the European automotive industry has not disappeared because of that,” Lemaître replied. “We compete [. . .] on quality, but we need to get into the race,” he added, calling for the “speed dimension” to be factored into regulations. 

“This is where I think clarity of goals is important,” he said. “The regulatory side has to be sufficiently quick on its feet. Otherwise, ideas will melt away.”