Brazil and Mexico Pay Suppliers Faster Than Many EU Countries

Council Working Party on Competitiveness and Growth Debate Late Payments Directive

BRUSSELS, March 18, 2010 - Brazil and Mexico are putting many European countries to shame by paying
their suppliers within 55 days. The data obtained from a Eucomed member
company comes as the Council Working Party on Competitiveness and Growth is
having another round of discussions on the revision of the Late Payments
Directive in Brussels. Eucomed urges member states to adhere to the 30 days
payment goal for public authorities and opposes any different treatment for
hospitals.

Current Situation: long delays

Some half a million people are employed in the European medical
technology sector. Its livelihood depends to a large extent on contracts with
public authorities - most often public hospitals. Yet these authorities have
failed to pay 10% of the total turnover of the medical technology sector and
over EUR11 billion is owed to medical technology firms by three EU Member
States alone. Representing 80% of the sector, SMEs are most at risk and their
fragile situation is of course worsened by the current economic climate.

"Small medical technology firms are waiting for up to 700 days to be paid
by public bodies. The situation has become so severe that some companies are
facing bankruptcy or may consider to exit the market" said John Wilkinson,
Chief Executive of Eucomed. "Unfortunately, patients will also suffer when
companies withdraw from the market and the range of products and treatments
available will be restricted. This will have the effect to adding to health
inequalities across Europe."

Disparities within Europe

Suppliers to the private sector can try to manage the problem by refusing
to deliver goods until bills are paid or by seeking cash upfront. But when
public local and national authorities are your principal customers, as is the
case in the healthcare sector, this becomes more difficult. Healthcare
companies not only have an ethical duty to deliver life-saving goods to
patients but they would also risk their business relationships with the
authorities that they serve. Public bodies in northern Europe generally
accept that they have a duty to honour the terms of contracts. Elsewhere,
national and local governments feel under no such obligation. In some cases,
they clearly exploit their dominant position as near monopoly buyers.

In Spain and Italy, the average payment time is approximately 250 days.
However, in some of their regions, this figure exceeds 600 days. In order to
alleviate the situation in Spain, the country's Parliament will vote on 23
March 2010 on a law which foresees a 30 days payment target for public
authorities as well as accelerated procedures for claiming interest.
Meanwhile, the situation is much the same in Turkey with public authorities
taking on average 256 days to pay suppliers. However, it is not all doom and
gloom in Europe. For example, the British Government has committed central
Departments and agencies like the National Health Service to pay within 10
days. This measure is part of a package to help in particular small and
medium-sized businesses through the economic downturn and has resulted in
nine out of ten invoices now being paid within that timescale. Ireland is
another country where the Government is helping industry to recover from the
crisis. Central government departments have committed to pay within 15 days
with state bodies such as the Health Services Executive (HSE) promising to
pay within 30 days.

"The situation across Europe varies dramatically and it is extremely
surprising that countries such as Brazil and Mexico are paying suppliers
quicker than many European countries," said Mr Wilkinson. "To bring Europe up
to speed, the Late Payments Directive should eliminate loopholes and
encourage early payment by imposing penalties."

Long and winding road

In 2000, the EU adopted Directive 2000/35/EC to protect companies from
late payments. The Directive entered into force on 8 August 2002 for the then
15 Member States and the three States of the European Economic Area; on 1 May
2004 for another 10 European countries and on 1 January 2007 for Bulgaria and
Romania. It was soon apparent, however, that the Directive did not have the
desired effect on the payment performance of public authorities within the
EU. A public consultation process thus began in September 2008 which led to a
Commission proposal for revision in April 2009. The European Parliament and
Council are currently discussing their positions. The responsible Internal
Market committee will vote on the proposal on 8 April 2010, while the plenary
vote is foreseen for May 2010.

    Media Contacts

    Mark Grossien
    Director Communications and External Affairs
    mark.grossien@eucomed.be
    +32(0)2-775-92-24

Media Contacts: Mark Grossien, Director Communications and External Affairs, mark.grossien at eucomed.be , +32(0)2-775-92-24.