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Competition: Commission publishes study on EU conveyancing services market

European Commission - IP/08/101   29/01/2008

Other available languages: FR DE

IP/08/101

Brussels, 29 January 2008

Competition: Commission publishes study on EU conveyancing services market

The European Commission has published a study by independent consultants on the EU markets for legal services associated with house and land sales (conveyancing services). The study finds that consumers have greater choice and are on average paying less for conveyancing services under deregulated systems, with no loss in quality. The market for conveyancing services is worth about €17 billion per annum; efficiency savings of even a few percent following deregulation would therefore save consumers millions of euros each year. The Commission is calling on Member States to look at the findings and to review and update national laws which limit competition and the free circulation of services throughout the Single Market instead of serving the interests of consumers.

Competition Commissioner Neelie Kroes said: “Most Europeans buy or sell a home or land at some point in their lives, and will have to pay the associated legal fees. This report presents the economic evidence that highly regulated systems are not better for consumers in terms of price and choice of legal services."

Internal Market and Services Commissioner Charlie McCreevy said: "There are no big surprises in this report and it is plain where consumers are being provided with more choice and lower costs."

The study led by ZERP at Bremen University carried out an analysis of the effects of professional regulation on the efficiency and performance of the conveyancing services market. Conveyancing services comprise, for example, pre-contract searches, transfer deed drafting, signature certification and deed registration in the Land Registry. This market is of direct interest to consumers and of high overall economic significance. It is estimated that property turnover in the EU27 for 2005 was almost €1,800 billion (16% of EU27 GDP) with the corresponding turnover in conveyancing services being around €16.7 billion. Measures to open up this market will therefore directly contribute to the Lisbon objectives of growth and jobs.

The study, surveying 21 EU countries, is the first of its kind and integrates a legal and economic approach. The different regulatory systems under which conveyancing services are provided were categorised into four regulatory models for analysis:

  • The traditional, highly regulated Latin notary system which exists in most continental EU countries. This model is characterised by mandatory involvement of notaries, quantitative restrictions on entry (numerus clausus), fixed fees and strict market conduct regulation.
  • The deregulated Dutch notary system under which no numerus clausus exists. Fees are negotiable and market structure and conduct regulation is less strict.
  • The lawyer system existing in the UK, Ireland, the Czech Republic, Slovakia and – to a lesser extent – Austria. This features quality control of professionals through licensing and professional exams, negotiable fees and lower levels of market structure and conduct regulation.
  • The Scandinavian licensed real estate agent system under which real estate agents provide legal services too. This system exists in Sweden, Finland and Denmark, each with its own characteristics. This model has little regulation on market entry, conduct and structure and has negotiable fees.

The legal part of the study assesses the justifications for restrictive professional regulation in this market. The study comes to the conclusion that, when put to the test, most of the arguments put forward do not seem to justify restrictions of the sort that feature in highly regulated systems.

The economic part examines empirically how professional regulation affects the market for conveyancing services by measuring the degree of regulation, the quality of services in a broad sense (using the results of a user survey) and level of fees. It examines the interplay between these using different classical econometric methods. This concludes that high levels of regulation generally go hand in hand with high prices whilst not resulting in higher levels of quality.

The Commission will now present the study to Member States, highlighting its results and asking for their reactions while encouraging them, when necessary, to consider appropriate reforms.

A full report of the study is available at: http://ec.europa.eu/comm/competition/sectors/professional_services/studies/studies.html

and

http://ec.europa.eu/internal_market/whatsnew_en.htm


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