The Federal Council has announced its intention to reduce the regulatory burden on undertakings. Accordingly, on 9 December 2022 it adopted the draft of an Act on the Relief of Undertakings from Regulatory Costs (hereinafter: “Undertakings Relief Act”) and the associated dispatch. The Federal Council also proposed the introduction of a Regulation Brake and adopted an associated dispatch, although it rejects such an instrument. The Federal Council is thus fulfilling a mandate from Parliament.

As efficient and moderate regulations are a central element for attractive economic framework conditions, the Federal Council proposed the Undertakings Relief Act containing various targeted measures for administrative relief. The legal anchoring of principles and audit obligations are intended to ensure that new regulations are designed to be efficient and administratively lean, especially for small and medium-sized undertakings. Regulatory costs of undertakings shall be shown more transparently and thus be included in the decision-making basis of the Federal Council and of the Swiss Parliament. Furthermore, existing regulations shall be specifically examined for their relief potential by means of area studies. Overall, the federal administration shall more consistently identify and exploit the relief opportunities in existing and new regulations. According to the Federal Council’s press release, the draft law as well as the individual measures received broad support in the consultation process. The Federal Council emphasized that most respondents saw a need for action to strengthen efforts to reduce the burden on undertakings.

The proposal to introduce a Regulation Brake, however, aims to curb the regulatory burden on undertakings. According to the parliamentary mandate, regulations that are particularly costly for undertakings shall in future be subject to a qualified majority in Parliament, which requires an amendment to the Swiss constitution. The Federal Council defined the following thresholds as criteria: more than 10’000 undertakings burdened with higher regulatory costs or a total of more than CHF 100 million in regulatory costs for all undertakings over a period of ten years. This second threshold shall mean that enactments which affect fewer than 10’000 undertakings, but which are nevertheless associated with high regulatory costs overall, shall also subject to the Regulation Brake.

As the Federal Council states in its press release, it was critical of the instrument of a Regulation Brake from the outset. The Federal Council also points out that the draft was assessed controversially in the consultation process. Nevertheless, the Federal Council decided on 4 March 2022 to prepare a dispatch and to fulfil the mandate of Parliament (Motion 16.3360 FDP-Liberal Group), but to refrain from proposing approval of the Regulation Brake. On the one hand, the proponents emphasised in the consultation that the instrument could draw the necessary attention of the federal administration and Parliament to the burdens on undertakings. On the other hand, the Federal Council emphasised that the disadvantages of the Regulation Brake would be more significant than the expected relief: Accordingly, the Federal Council justifies its rejection of the Regulation Brake with the associated state policy side effects, which would be offset by a rather manageable expected relief effect on undertakings. The Federal Council therefore concludes that the hoped-for relief effect might also be achieved with the Undertakings Relief Act and thus without restrictions to the Swiss Parliament.