Single Market Europe & Effects on PAYBACK as a European Company

PAYBACK GmbH (an affiliate of Loyalty Partner GmbH, short LP) as Germany ́s largest loyalty card provider with more than 300 partner companies and a market share of +60% has recently launched its first subsidiary in the EU – PAYBACK Poland in September 2009. This is a major step for a medium enterprise in the service sector like PAYBACK, because EU regulations towards the Single European Market have severe effects on most businesses operating in it. Since the start, PAYBACK Poland is developing very well and the aims for PAYBACK-Poland are not lower than those of its German counterpart, which is to gain the largest market share in the loyalty program sector. The Single-European-Market (SEM) is of course helpful in achieving this business goal but the SEM ́s effects are always different from one branch to another – especially in the broad service sector which is, according to the EU commission, responsible for about 70% of the EU ́s economic activity and therefore for the largest part of each country ́s GDP. However these effects aren ́t always an advantage for the enterprise as later case study examples will show. In the later parts of this report influences of the SEM on PAYBACK in specific will be shown and analysed. The idea of Single-European-Market went back till the Treaty of Rome but it took another 30 years and the Single-European-Act, in which the qualified majority voting was agreed, to pave the way for the completion of the single-market. The main issue of the single market (which is by now not fully completed and needs constant surveillance in order not to make regressions) was the removal of the physical, fiscal and technical barriers which prohibit free trade inside the European Union. The SEM hereby relies on four pillars which are fundamental to a free market: freedom of movement for goods, services, capital and people. In this report an overview of the SEM effects on PAYBACK ́s business operations will be given as well as a deeper evaluation and analysis on the key influencing element for PAYBACK ́s business in Europe: the freedom of service.