1. What standards are worth
Hans Peter Homberger*
Technical standards contain guidelines or characteristics related to the manufacturing, testing or
conformity assessment of products as well as product properties, packaging or labelling. Such
standards are defined by organisations specifically appointed to do so, but they are not legally binding.
As a matter of fact, they are private standards. In jurisprudence, state-defined rules (such as laws and
regulations) are referred to as standards as well. As a legal term, the concept of ‘standards’ is used to
collectively designate statements of a prescriptive nature, types of behaviour to be demonstrated, or
bans. In practice, the dual meaning of ‘standards’ often causes misunderstandings. In particular, many
people find it difficult to understand why private standards should come at a price. The article below is
an attempt at creating transparency with regard to the pricing of private standards.
Table of content
1 Introduction
2 Laws and regulations
3 Private standards
4 How laws and private standards complement each other
5 A closer look at references
6 The benefits of private standards
7 Price/performance ratio of private standards
8 Standards are not free of charge
1 Introduction
The price of a good or service is defined by the point of intersection of the curves of demand and
supply in a price-volume chart. Price agreements are inadmissible and therefore prohibited.
Obviously purchasing experts will be inclined to ask for discounts for volume orders or quick payment,
and to compare prices. Consumers tend to reduce the situation to our subjective perception of
something being expensive or cheap. We consider expensive whatever fails to produce the value for
money we expect.
When it comes to pricing, there are special cases of a strategic or fundamental nature. Businesses
may opt for a strategy based not only on discount but also on rock-bottom prices. Dumping prices may
be used temporarily to entice customers away from competitors until those competitors disappear as
suppliers. This is a scenario usually reserved for major companies with sufficient power to also enforce
the necessary cost-saving measures.
Superficially speaking, free offers present short-term benefits for consumers. Free tickets, free
newspapers, free membership, etc. generate expectations that cannot possibly be met if you think
about it properly. All of us are aware that there is no free lunch at the end of the day, and yet free
offers have a certain negative effect. Hunting for those free offers, one may easily forget that each
product and each service has to be funded one way or another, whether or not it is apparent at first
glance how such funding works.
2 Laws and regulations
The possibility of obtaining or viewing a printed copy of a law is a well-known example of a service a
state provides free of charge. Pursuant to publication law, the stock of Swiss laws is to be published
officially, and free access is to be granted to it. This applies to both printed and electronic formats of
the documents. The Swiss government may instruct for fees to be charged for paper formats, but such
fees do not usually exceed the price for document printing. The state finances free distribution of the
texts of laws and regulations by means of tax income.
3 Private standards
In a system based on division of labour, it has shown to be effective to apply private standards rather
than legislation to control interoperability of products and services at interregional and global levels.
This becomes clear when considering questions answered and controlled by international standards,
such as:
 What test set-up is required for measuring the fuel consumption of a passenger car?

2.  Which safety precautions (safety at work, hygiene etc.) need to be taken by facilities for industrial
production?
 How can requirements for toys be met with regard to the protection of children’s health?
The three examples above demonstrate how significant private standards are:
 Deliberate misstatement of a passenger car’s fuel consumption may be interpreted as an offence
of deceit and used as grounds to challenge a purchase agreement.
 Negligence with regard to safety precautions may lead to liability action in case of an accident.
 Use of an inappropriate testing method for measuring the noise produced by toys may be
interpreted as a cause of bodily harm.
It is obvious and easy to understand that such interrelatedness and complementarity between private
standards and state-defined rules gives rise to the question as to whether standards should not be
distributed free of charge, just the way state-defined rules are.
To what extent are private standards subject to an obligation of free distribution? According to current
legislative practice, laws often simply indicate where private standards may be obtained. Felix
Uhlmann states:
What does such practice mean? Is it sufficient to indicate a source that considers the production of
standards a business rather than a state service? Do legal subjects have to pay for standards they
are called upon to comply with?
Swiss publication law provides no answer, or only a partial one, to the question of publication of
private standards. While the law stipulates that standards by private administrative bodies must be
published (…), it does not make any mention of purely private rules (Uhlmann 2013, 89).
Given that law-making is partly funded by tax money and work performed by non-professional
politicians, its costs are not easily identified.
There is no doubt that private standards are important for business. However there are so many
players with an interest in helping to shape those standards that harmonisation and consensus -
building would take a great deal of effort and negotiation if the companies involved had to perform this
work in parallel to running their core business. In my opinion, it was a very wise decision by the
business world to establish national organisations for standardisation to act as ‘agencies’ watching
over national stocks of standards, the process of standardisation, and international harmonisation.
These organisations for standardisation are most suitably equipped to process thousands of
standardisation projects in a great variety of industries. It is my belief that the costs incurred must not
be subsidised by the state; if anything, they ought to be covered by means of service agreements
based on clearly delineated mandates. Private standards should primarily be funded by business and
those mandating them, irrespective of whether the purpose of a standard is to implement a law or to
describe state-of-the-art practice. The possibilities of finding resources to fund a private organisation
for standardisation are limited. They include:
 membership fees;
 a mandate from the state or top-level trade associations;
 the sale of standards and related publications; and
 information services.
At SNV, the Swiss Association for Standardization, mandates and membership fees account for 13%
and 17% of turnover respectively whereas 70% of turnover is generated by the sale of products and
services. The prices asked for standards are defined so as to make sure the organisation for
standardisation has sufficient financial resources for modern infrastructure, committed and qualified
staff, and a sustainable investment strategy.
4 How laws and private standards complement each other
Laws and private standards are interrelated. Take for example the ‘New Approach’, a practice
launched by the European Commission in 1985. Today this practice designating the interplay between
laws and private standards is called ‘co-regulation’.
The European Parliament passes Directives that specify objectives and requirements rather than
details. With regard to certain Directives, the European Commission asks the organisations for
standardisation to draft standards defining implementation of, and practical procedures for compliance
with, those standards. On this co-regulatory path, the European organisations for standardisation, i.e.

3. CEN, CENELEC and ETSI, co-operate closely with the national organisations for standardisation of
the member states of the EU and EFTA. Through SNV, the Swiss national organisation for
standardisation, Swiss businesses are enabled to become involved at the leading edge of the process
of shaping the content of standards in agreement with their specific interests. Reference is then made
to such standards in laws and regulations.
5 A closer look at references
According to documentation of Prof. Felix Uhlmann’s lectures in 2011, the legal force of private-law
standards is determined by type of reference of which there are two, i.e. dynamic and static:
A reference is dynamic if the current version of a standard, rather than a specific one, is
declared applicable at all times. This means that the standard to which reference is made is
subject to change introduced by parties other than the one making the reference. While private
standards become law passed by the state in case of static references, dynamic reference to
private standards amounts to delegation of law-making. The latter is admissible only on the
following conditions, among others: according to the principle of legality and separation of
powers, it is the legislator’s responsibility to take care of passing significant standards, which
means that only standards of lesser significance may be delegated to private bodies; such
delegation requires authorisation stipulated in constitutional law, investing private bodies with
law-making powers and specifying the necessary legal act of transfer (formal law). If the
significance of a standard is so minor that the standard (e.g. a purely technical one) may be
introduced by means of an enforcement ordinance, it is functionally a case of administration in
which administrative tasks are transferred to private bodies (with regard to the state, see art.
178 para. 3, constitution of the Swiss Confederation) (Uhlmann, 2011).
From an academic point of view, only limited significance seems to be attached to private standards,
and yet they are regularly referred to in litigation. When something was performed in accordance with
standards drafted by recognised organisations for standardisation, the general (including legal)
assumption is that state-of-the-art practice was applied. For example the European Machinery
Directive specifies in art. 5, para. 1 that the manufacturer or his authorised representative shall ensure
that the machinery satisfies the relevant essential health and safety requirements set out in Annex I.
Annex I then demands that a risk assessment be made.
In addition, so-called presumption of conformity applies when something was performed in accordance
with the Machinery Directive, which means that machinery was designed and built in keeping with the
relevant fundamental health and safety requirements. Thus the onus of proof is reversed in case of
damage. When no harmonised standards are applied, the onus of proof lies with the manufacturer.
The question is: when is a standard significant?
It is the legislator’s responsibility to take care of standards that are significant in terms of content.
These are the criteria to define significance (see Gächter, 2012):
 A standard having a strong impact on the legal status of the target group.
 A standard having major financial consequences for the target group.
 A standard with special significance for political opinion-building, public administration, or
procedure as a whole.
 A standard governing a particularly controversial issue.
 A standard directed at a large target group and a high number of situations in life.
These criteria may provide clarification from a legal point of view, but they do not draw a straight line
between significance and insignificance for private organisations for standardisation. They are
theoretical criteria and not driven by practice. As outlined above, European standards in the machinery
industry have a strong impact on the legal status of the target group when a defect occurs in
manufacturing or production. Compliance with standards for risk and quality management, in particular
in the field of health and environmental protection, may at times have substantial financial
consequences for producers, consumers and society. A study investigating the impact of primarily
private standards (that are insignificant according to legal theory) concludes that private standards
produce considerable, albeit hidden, financial benefits for the economy.
6 The benefits of private standards
First and foremost, standardisation is a process aimed at finding a consensus on the properties of a
product, system or service based on recognised rules. Whether the subject matters of this process of
standardisation are significant or not is determined by practice rather than theory. This approach has

4. proven its worth. While the benefit for economic development of self-regulation based on recognised
organisations for standardisation does not take priority, it is uncontested that standardisation as a tool
of private self-regulation does make a positive contribution to a nation’s economy.
The benefits are noticed primarily in industries and fields of activity where no generally accepted
standards have been established yet. Where a variety of organisations for standardisation compete
using different processes, no change is brought about compared to the previously uncoordinated
situation. For example, if there were harmonised standards for IT interfaces in the Swiss healthcare
system, covering patient files, GPs, specialists, hospitals, rehabilitation centres, and health insurance
companies, Switzerland would save several hundred million francs a year. Various providers of
software for the healthcare system openly admit to having suspended development of such products
for reasons of investment protection because no reliable standards are available. In my opinion, one of
the most important tasks yet to be completed in healthcare is to achieve harmonisation of systems and
processes by means of a clear strategy, as well as effective professional performance of
standardisation work.
7 Price/performance ratio of private standards
As mentioned at the outset, what something is worth is a matter of the user’s or buyer’s subjective
perception. While standards clearly have their benefits, they may also require adaptation, or introduce
restrictions. Therefore it is appropriate to consider the price/performance ratio of standards from three
different points of view.
a) The state’s point of view
National law-making, i.e. the passing of legal standards, is the responsibility of parliament. In the
jargon of legal experts, it is the state’s privilege to take care of significant standards. The legislator
may make static or dynamic reference to private standards that generally describe the practical
procedures to be applied to meet legal requirements.
However this does not give private standards a quasi-legal status; it merely defines state-of-the-art
implementation. Making reference to private standards and thereby relying on a well-managed stock of
standards including qualified information validated by experts, the legislator obtains a degree of relief.
Contrary to laws, private standards are subject to regular review and adaptation every five years. Thus
it is very safe to say they are state-of-the-art.
b) The point of view of entrepreneurs
Purchasing private standards, a company obtains a high degree of legal certainty with regard to
conformity and prevention of damage caused by the products and services it markets. In the absence
of private standards, such legal certainty would have to be bought in through specialised lawyers,
proven experts, or an internal legal-compliance unit. So private standards present an immaterial value
that justifies their prices, some of which are hefty, and this plausibly demonstrates why standards laid
down on only few pages of text are more expensive than a pocket book of more than 100 pages.
Owing to guidelines clearly defined in International Standards, SMEs are enabled to become
subcontractors to globally operating corporations because of the necessity of agreement on
specifications for products, components and services in a world dominated by division of labour.
c) The point of view of consumers and society
The high cost of lack of standardisation is most striking in the field of consumer electronics.
Consumers have no other choice than to buy expensive adapters and the like if they want to combine
different things a device can do. Manufacturers design the interplay between components in consumer
electronics in such a manner that repairs do not usually make sense financially. This generates a
gigantic volume of electronic scrap which we export to developing countries and emerging markets.
There is an urgent need for international regulation designed to contribute to solving this
environmental issue. A potentially successful approach would be to have well-structured strategic co-
operation internationally, taking care of policy at the highest level and commissioning the international
organisations for standardisation to draft standards for implementation including measurable criteria
for resolving the issue.
8 Standards are not free of charge
There is a price to pay for standards! Granted there are many industrial associations and interest
groups publishing rules, guidelines and private standards and distributing them ‘free of charge’, but
this is misleading the target groups because, in most cases, the work involved in drafting, updating
and distributing the documents is financed by either membership fees or direct payment of public

5. funds. Standards are not free of charge because they are products of work that represents monetary
value. According to studies, this monetary value is estimated to account for one per cent of GDP.
Standards are effective because companies can actively shape their content. This is an understanding
that opens up opportunities for Swiss companies and prevents a feeling of helplessness in the face of
Swiss and European legislation. Anyone who claims that Swiss companies get standards ‘imposed on
them’ by the state, the EU or other countries is ignorant of the possibilities of contributing to
standardisation, and fails to make use of them.
Successful Swiss companies demonstrate that it is possible to achieve a level footing or, indeed,
strategic competitive advantages in foreign trade by exerting targeted influence on European and
international standardisation. Standards are drafted under the influence of those who will be required
to apply them. Anyone may join a standardisation committee and contribute personal input and
proposals for improvement. In Switzerland, SNV is responsible for managing and assisting these
committees.
If Swiss politicians and entrepreneurs are currently suffering from overregulation, one of the reasons
may be that the state has a propensity to go for a new law rather than entrepreneur-friendly self-
regulation when a problem arises.
Hans Peter Homberger, Ph.D. (biochemistry), MBA, Member of the SNV Board, e-mail:
hp.homberger@bluewin.ch
Notes
* I would like to thank Dr Christian Schuhmacher (ministry of public health of the Canton of Zurich), Dr
Meinrad Vetter (court of the Canton of Aargau), and Urs Fischer (SNV) for their valuable input with
regard to procedural and legal aspects.