The «idea of overall reduction of the restrictiveness of market regulation is only appropriate as long as regulation is not aiming to overcome or minimise market failures» warns a recent study conducted for the European Parliament’s committee in charge of Internal Market (“The new Restrictiveness Indicator for Professional Services: an assessment” released in September 2017).

This should fuel the hot debates around the adoption of the draft ‘Directive on a proportionality test before adoption of new regulation of professions’.

Indeed, it is a settled economic rules that some peculiar «professional services are regulated with the aim to minimise market failures such as (insufficient) consumer protection (here, especially sound and reliable conditions for ‘trust’ in the capabilities and ‘integrity’ of providers), health and safety (e.g. medical, para-medical, pharmacists; engineers and architects) and investor protection (e.g. accounting)» recalls the economist Prof. Dr Jacques PELKMANS (Senior Fellow, CEPS, Brussels). Regulations of health professions are typical of such a market’s situation.

An important conclusion is however drawn from this recall of basic economic principle :

Therefore, when monitoring the legitimacy in the Internal Market of professional regulations, «blending either disproportionate or unjustified regulation with regulation addressing market failures creates a fundamental problem of balance» state the study.

This argument has been advocated by health professions in Brussels for months; they consider this problem of balance is ignored in the current drafting of the draft Directive. The argument was presented in details during a hearing organised in European Parliament by the EPP party on 27 September (The Services Package – an alternative to enforcement action?“). 

«Whereas with unjustified or disproportionate regulation, ‘less is good’, that is, less restrictiveness is helping the better functioning of markets» [such is the draft’s ambition, such is also the Internal Market’s moto], «this is not the case with regulation dealing with ‘societal risks’ (i.e. market failures)»(see page33 of the study and its executive summary) emphasises the report.

It is hard to be clearer. 

This economic study calls for a different approach of the monitoring by the EU of the professional regulations when it comes to market’s specificities like the one encountered by health professions.