The Catalan Government rejects Spain's new market unity law as it recentralises power

Barcelona (ACN).- The Catalan Executive has rejected the proposal of law strengthening market unity which was approved on Friday by the Spanish Government. The new law officially aims to simplify the bureaucratic and legal framework in which companies operate throughout Spain, eliminating obstacles for a more efficient single market. However, the Catalan Government fears that Madrid’s reform does not really aim to boost the economy and help companies, but to recentralise power. The Catalan Deputy Minister for Business and Competitiveness, Pere Torres, believes that the new proposal “radically modifies” the current distribution of competences on economic regulation and “aims to cancel the Autonomous Communities’ legislative and execution capacities” in this field, “with the excuse of making the economy more dynamic”. Torres hopes that the definitive law will be significantly changed in relation to the current proposal during its approval process, as otherwise the Catalan Government “will use all their legal tools” to stop the initiative.

On Friday, the Spanish Government approved a project of law to foster market unity within Spain. According to the Spanish Executive, the initiative should reduce the administration costs for creating companies by 35% and it would ease their operations throughout Spain. As a consequence of this reform, companies should save some €1.5 billion per year, stated the Spanish Minister for the Economy and Competitiveness, Luís de Guindos. In addition, he added that the reform will make Spain’s GDP increase by 1% over the next 10 years. The new proposal includes measures that might be particularly controversial, considering Spain’s constitutional organisation, which has been in place for the last 35 years. However, De Guindos has denied that the reform is aimed at recentralising or homogenising Spain.

The Competition Authority will be able to cancel Autonomous Community laws

One of the potentially controversial measures is that the new Competition Regulation Authority will have the power to automatically cancel a law approved by a democratically elected parliament of an Autonomous Community if it believes that the law goes against the principle of market unity. The Competition Authority will have to take the autonomous law to court and if the judge accepts studying the complaint, the law will be automatically suspended until the court reaches a decision. The new Competition Authority groups all the existing bodies and it was criticised by the European Union for not being independent enough from the Spanish Government. Furthermore, each economic regulation approved by the Autonomous Community will have to have a report analysing its impact regarding Spain’s market unity attached.

Finally, another measure is that companies will only have to comply with the laws of the Autonomous Communities where they are based, in order to be able to operate throughout Spain. The Spanish Deputy Prime Minister, Soraya Sáenz de Santamaría, explained that “we want for Spain what works for all of the European Union Member States: that companies can work with a license issued by another public body”. According to her, the new law is based on the “cooperation principle” and on the “shared trust” among government levels and the Autonomous Communities.

The Catalan Government fears an invasion of power

Barcelona accuses the Spanish Government of “homogenising the Autonomous Communities” with the new proposal of law fostering market unity within Spain. In addition, the Catalan Executive believes the new law aims “to subordinate the Autonomous Communities” to the Central Government, without respecting their legislative and executive autonomy on the regulation of economic activities. These powers are recognised by the Spanish Constitution and the Statutes of Autonomy, as well as by many other laws approved in the last 35 years.

The Catalan Executive denounces an invasion of competences with the excuse of smoothing out bureaucracy and legislation for companies. Torres remarked that the diversity of competences among different government levels regulating economic activities is totally in line with the European Union’s Service Directive as well as the rest of EU legislation, guaranteeing the European Single Market. Torres hoped the law proposal will be changed during the approval process, respecting the Autonomous Community powers while helping business.

Torres criticised the fact that the current proposal will mean that “the standards of quality will be set by the Autonomous Community setting the lowest regulation level”, since companies will be able to operate throughout Spain only by honouring the laws of one region. In addition, he criticised the fact that the measure does not allow the Autonomous Communities “to exercise their self-government capacities to choose to raise the protection levels for their citizens and their quality of life”.

Potential regulation dumping

The Catalan Government fears regulation dumping to attract companies. For instance, an Autonomous Community with a stricter legislation on environmental protection would see how a corporation could operate in its territory following less strict rules from the Autonomous Community where it is based. A potential response to this situation might be the lowering of environmental standards in the first Autonomous Community, in order not to have the companies based in its territory discriminated against. Furthermore, companies could move from one Autonomous Community to another looking for the less strict regulation framework.