(13) In order to ensure a consistent degree of protection for individuals in the Union and to prevent divergences that impede the free flow of personal data in the internal market, it is necessary to adopt a regulation that guarantees legal certainty and transparency for economic operators - including micro, small and medium-sized enterprises - and the same level of legally enforceable rights and obligations and duties for controllers and processors for individuals in all Member States, that allows for consistent monitoring of the processing of personal data, and that ensures equivalent penalties in all Member States and effective cooperation between supervisory authorities from different Member States. In order for the internal market to function properly, the free flow of personal data within the Union shall not be restricted or prohibited on grounds relating to the protection of individuals in connection with the processing of personal data. In view of the special situation of micro, small and medium-sized enterprises, this Regulation provides an exception for the registration of processing activities for entities with fewer than 250 employees. In addition, Union institutions and bodies, Member States and their supervisory authorities are encouraged to take into account the specific needs of micro, small and medium-sized enterprises when applying this Regulation. The understanding of micro, small and medium-sized enterprises should be based on Article 2 of the Annex to Commission Recommendation 2003/361/EC * .