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Brussels, 5 April 2002
THE EUROPEAN COMMISSION'S CONSULTATION DOCUMENT on
"CO-OPERATIVES IN ENTERPRISE EUROPE" - A RESPONSE FROM EURO COOP
Euro Coop is the European Community of Consumer Co-operatives, whose members are the national organisations of consumer co-operatives in 11 of the 15 Member States of the EU and in 4 Central and Eastern European countries. Created in 1957, Euro Coop today represents over 3,200 local or regional co-operatives, membership of which amounts to over 19 million consumers in the EU and 2 million in the associated countries of Central and Eastern Europe.
General Welcome
- The paper has been widely circulated within Euro Coop's member organisations. This response takes into account the views of many individuals and organisations but the consultation process is continuing and this draft will be revised to take account of any other views that come forward.
- We welcome the Commission's publication of this Paper as a contribution to recognising the importance of the co-operative sector, its contribution to the achievement of the Commission's objectives and as a step towards the Commission implementing specific measures in favour of co-operative enterprise.
Implementation
- We are strongly in favour of the current document being the precursor to a White Paper proposing legislative measures. This should be accompanied by a green paper that describes and analyses the sector in some detail.
Regulatory Framework
- For us the key issue is in section 3.1 of the Paper. This sets out two approaches to the future of co-operatives in overcoming any perceived difficulties they face in competing with investor-led businesses: a more flexible regulatory regime or a strict regulatory regime combined with "particular advantages or derogations". We are strongly in favour of the latter approach. The distinction between co-operative and investor-led enterprise must be clearly maintained. Diluting the co-operative form is irresponsible and illegitimate. It creates divisions between co-operatives in different parts of the world and between co-operatives in different sectors. A flexible regulatory regime permitting unequal voting amongst members and voting power related to equity stake is anathema to co-operative principles. Arbitrary ceilings on these measures are a flimsy defence and will eventually collapse. The measures are a distraction and, as the document itself points out, have not been widely adopted when they have been implemented.
- We think the commercial disadvantages attaching to the Co-operative form are not extensive. There are plenty of examples of successful co-operative businesses. The Paper itself says as much in section 4.2.1: "Co-operatives are a form of enterprise that is capable of competing on equal terms with other companies". Poor performance is rarely the result of legislative straightjackets. It is more likely to be due to poor governance, management or simple prejudice in the market place. The Commission should, rather, take measures to deal with these problems and reinforce the steps that the co-operative movement itself is already taking to tackle them. For example, the Co-operative Union in the UK has developed a programme for improving corporate governance.
- Some "advantages or derogations" for co-operatives are justified but, as the Paper states, these "must be a measured response to the restrictions implicit in the co-operative form". We think that further work is required to specify more precisely what these restrictions are and what the appropriate range of limited and highly specific fiscal benefits might be.
- We do not accept that "in those countries where no specific co-operative legal form exists the possibilities of the second approach are limited". Rather, the Commission should develop robust criteria that would enable such "advantages or derogations" to be obtained by co-operatives equitably throughout the EU irrespective of their legal form. These could include co-operatives reaching given levels of performance in achieving their social and specifically co-operative objectives. Again, the Paper says as much in section 4.2.1: "It should be made very clear that where social co-operatives receive fiscal or other advantages, these are on account of their social objectives and not because they are co-operatives per se". This would also reduce the danger of the "use of the co-operative form purely as a means of avoiding tax". The Commission should actively support the development by the co-operative movement of systems for assessing the social and co-operative performance of co-operatives.
- We do, however, support the other reforms set out in section 3.1, including the issuing of bonds, trading with non-members and permitting co-operatives to be started by a small number of people since these do not undermine the co-operative values and principles.
- We strongly support the call for the abolition of all prohibitions on co-operatives operating in certain trades in certain EU member states.
- Whilst supporting the focus in the Paper on co-operatives as enterprises contributing to wealth creation, employment and other economic measures we would welcome some additional mention of the wider social benefits that co-operatives can bring. For example, including co-operatives' contribution to the delivery of Member States' new National Action Plans to Combat Poverty and Social Exclusion would allow housing and health co-operatives to feature more prominently in the Paper.
The European Co-operative Statute (ECS)
- We support the Statute because two of our member organisations (KF in Sweden and FDB in Denmark) and COOPNKL in Norway will probably need the ECS as an instrument for their future merger into Coop Norden. We regret that the paper does not mention Coop Norden, or the co-operation between the consumer co-operative movements in Italy, Spain and Portugal as examples of co-operative enterprises. Indeed we hope that the revised paper will have more information on such co-operative enterprises and their achievements.
- We particularly like the statement in section 3.2 that "an ECS shall have as its principal object the satisfaction of its members' needs and/or the development of their economic and social activities and not the remuneration of a capital investment" and recommend this as a formulation to be used elsewhere in the Paper.
- Our strong opposition to the dilution of co-operative principles entailed by multiple votes and special shares applies as much to the ECS as to any other kind of co-operative.
Data
- We strongly support the proposals put forward in section 5.4 to improve the data on co-operatives. Consideration should be given, however, to a three, rather than five, yearly data collection cycle.
Co-operative Development
- We should like the Paper to include a recommendation that Member States should implement measures to encourage the establishment and growth of co-operatives, in collaboration with the representatives of the co-operative movement in their country.
- As well, the paper should underline more clearly the relevance of large co-operatives or co-operative groups as an important economic and social factor. Despite the statement in section 2.3.1: "large co-operatives where many thousand of members have a small stake of capital so their interest and influence may not be sufficient to ensure good governance", one should not forget that thousands of members entail a very important potential of economic and social influence that can also be valued by the co-op member. Some co-operatives, when becoming larger, have integrated the employees as worker members of the co-operative. In this way improving the stability and cohesion of the co-operative.
Contribution to Community Objectives
- Through Euro Coop, consumer co-operatives, as members, participate actively with contributions to the Community objectives. Euro Coop promotes, on behalf of its members, its positions through its relations with the EU institutions, with the media, with other consumer organisations and with Non Governmental Organisations (NGOs). In addition, Euro Coop participates and speaks at meetings, seminars, conferences, etc. to promote its various positions and increase its public profile. As well, Euro Coop participates in consultations with the European Commission through meetings between EU officials and Euro Coop experts; providing information to and replying to questionnaires from the EU institutions; participation in the institutions' initiatives and actions; and informal comments on projects and work themes the European institutions are proposing. Finally, as a European consumer organisation, Euro Coop is represented in various EU consultative committees, including the Consumer Committee, where it promotes its positions.
Contact: Louise Ousted Olsen, Acting Secretary General
Tél.: 02.285.00.76 - Fax: 02.231.07.57 - e-mail: Lousted_Olsen@eurocoop.org
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