Deadlock in talks on late payments

Date: 16/03/2000

By Renée Cordes

EU GOVERNMENTS and MEPs are deadlocked over European Commission plans to punish companies which fail to pay their bills on time.

The first round of conciliation talks between the two sides aimed at brokering a compromise last week merely confirmed how deeply divided they are over the issue.

Commission proposals published nearly two years ago would introduce uniform debt-recovery procedures throughout the Union. The move is aimed largely at giving small and medium-sized enterprises (SMEs), which are heavily dependent on the prompt payment of bills, more leverage in their efforts to get accounts settled on time.

The Commission claims that late payments cost the EU more than 450,000 jobs a year and are responsible for more than a quarter of all bankruptcies involving SMEs.

But member states and MEPs are split over key issues such as how long companies should be given to pay their bills, what penalties they should face if they fail to meet the deadline, and whether creditors should be allowed to hold onto property until debts have been paid.

Union industry ministers agreed last year that firms which failed to pay their bills after 30 days should pay interest at six percentage points above the European Central Bank's repurchase rate, but MEPs want a deadline of 21 days and interest to be paid at eight percentage points above the repo rate.

The talks come as the Commission is facing renewed criticism for failing to pay its own bills on time. The institution has been given until the end of this month to inform EU Ombudsman Jacob Söderman of the steps it has taken to reduce delays in making payments to contractors and organisations. The Commis-sion's answers will be published on the Internet because of intense public interest in the case.

EU governments and MEPs are deadlocked over European Commission plans to punish companies which fail to pay their bills on time.