The European Commission (EC) has recently introduced the concept of the “Omnibus Simplification Package”. This proposal aims to reduce the administrative burden created by new legislation for European companies, particularly small and medium-sized enterprises (SME). It also seeks to strengthen the EU’s competitive position. This package, or rather a series of packages as the EC itself notes, is intended to simplify existing legislation so that companies spend less time and fewer resources on bureaucratic processes. These simplifications allow businesses to focus more on innovation and growth, which is essential in the digital transformation that is currently under way.
The digital transformation brings risks, including issues relating to data protection and the security of the financial system. To address these challenges and stimulate innovation, the EU is introducing a considerable volume of new legislation. This serves several purposes, such as risk management, harmonisation and promoting competition. Geopolitical and economic independence and the protection of European values also play a role in this regulatory agenda.
Against this backdrop the first Omnibus Package is now being introduced. Is the EU solving a problem of its own making? This package almost reads as an indirect acknowledgement by the EC that some of its own regulation may have gone a little too far, at least for certain businesses.
The Omnibus Package: what do we already know?
The first Omnibus Package will be published on 26 February 2025. We do not yet know its precise scope, but several points are already clear. The Omnibus Package does not mean that companies will suddenly no longer need to comply with European legislation. Instead, it creates an integration of reporting obligations across several legislative instruments, such as the Taxonomy Regulation, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Although this integration is intended to reduce overlap in reporting duties, particularly for SMEs, others argue that it may undermine the effectiveness of EU legislation. The EC states that measures will be taken to ensure that the core principles of existing legislation are preserved.
Potential implications
Implementing the Omnibus Simplification Package may have wide-ranging implications for European law and for specific legal domains. Reducing administrative burdens may strengthen the competitive position of European companies and stimulate innovation. The latter was recently highlighted by Mario Draghi in his report “The future of European Competitiveness”, in which he states that Europe needs far more coordinated industrial policy, faster decision-making and massive investment to keep pace economically with rivals such as the United States and China.
At the same time there is a risk that integrating different legislative instruments will weaken existing standards. This may affect how companies meet their obligations and how regulation is enforced within the EU.
For companies affected now or in the future this means that change is coming, bringing both opportunities (a degree of grey area) and challenges (legal uncertainty). It is essential for companies, and especially their legal and compliance specialists, to stay informed about these developments and to understand how they may influence operations.
The EC presents this package as a simplification, but it will not have escaped anyone’s attention that EU legislation tends to grow rather than shrink. The final question, for which the answer will take time: will the EU start to deregulate in the interest of innovation?
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