A directive which will allow businesses to penalise firms which are slow paying their debts was given political approval yesterday by EU industry ministers. The directive, with some technical amendments, will now go to the European Parliament for amendment after which it is likely to take two to three years to transpose into national legislation.
It provides for the payment of interest on late payments after 30 days at 8.5 per cent (6 per cent plus the ECB repo rate, currently 2.5 per cent). The directive applies to transactions with both the private sector and the state.
The decision was welcomed by the Tanaiste and Minister for Enterprise and Employment, Ms Harney, who said that it was a milestone in speeding up payment procedures.
Speaking to ministers, she said that late payment "has proved to be a very significant problem for businesses, in particular small businesses. It causes serious cash flow problems; it requires firms to extend overdraft facilities or engage in additional borrowing, and it consumes a good deal of scarce management time that could be better spent in growing the business".
Ireland and Portugal would have preferred a 45-day grace period but agreed yesterday to 30 days to allow general agreement.
But the proposed directive has been significantly watered down, to the disappointment of Ms Harney and the Greek Commissioner for SMEs, Mr Christos Papoutsis, by the removal of a provision to allow the recovery from the debtor of the legal costs of enforcement.
It is likely that MEPs, who are certain to back the legislation, will attempt to restore the clause in question.
The meeting gave broad welcome to a new Commission White Paper on the reform of competition policy. The paper, a farewell gift from the departing Competition Commissioner, Mr Karel van Miert, suggests the decentralisation to member-state competition authorities of the vetting of applications for exemptions to restrictive practices rules, currently exclusively a Commission competence. Common rules will continue to apply.
Ministers also agreed a directive extending consumer product protection to non-manufactured agricultural products. Introduced in the wake of the BSE scare, the directive will allow consumers to sue farmers directly for the first time for damages from defective products such as BSE-infected meat or bacteria-infected eggs. The directive takes effect at the end of 2000, but lawyers warn that proving damage and establishing a direct link to a particular farmer may prove difficult.
