The European Commission appeared to backtrack this week on its demand for the introduction of full-scale multi-disciplinary partnerships (MDPs), with the publication of its much-anticipated report on competition in professional services.

The commission instead provided support for the similar disciplinary partnerships (SDPs) model envisaged by David Clementi in his ongoing review of the legal services market in the UK.

Business structure regulations such as restrictions on ownership appeared 'to be least justifiable in cases where they restrict scope for collaboration between members of the same profession', the report said.

As for MDPs drawn from a wider range of professions, the commission conceded that restrictions were more justifiable where there was a need to protect practitioners' independence or personal liability.

It cited the European Court of Justice's ruling in Wouters, which upheld the Dutch bar's ban on MDPs on the grounds that it was a justifiable restriction.

But the commission said any regime should have the least number of restrictions required to protect independence and ethical standards.

Hans-Jrgen Hellwig, president of the Council of Bars and Law Societies of the European Union (CCBE), welcomed the recognition given in the report to regulation by the professional bodies and to their role in ensuring the public interest.

In other key findings affecting the legal sector, the commission demanded the removal of remaining price-fixing regulations in the EU, as well as bans on advertising.

Alison Hook, director of international at the Law Society, said this would be welcomed by English and Welsh law firms with foreign offices.

The commission put the onus for reform on governments, national competition and professional bodies, saying it would monitor their efforts and was prepared to intervene if they failed to tackle violations.

An Office of Fair Trading spokesman said competition in the legal profession is 'ongoing work', but it is currently focusing on QCs.

The commission expects to report in 2005 on the progress made.

By Philip Hoult