A&G Newsletter Q1 2021

I. EU establishes Capital Market Union

With the publication of the Capital Market Union Action Plan, the EU Commission has defined the roadmap for the unification of the European capital market. The EU Commission’s policy has three objectives: to support the objectives of the Green Deal; to encourage individuals to invest in long-term projects; and to unify national markets by tackling regulatory barriers.

In more detail, the EU Commission schedules more than 16 targeted actions to achieve a unified capital market. Among the actions planned by the EU Commission are a harmonisation of the shareholders rights, a strengthening of investment protection rules, a review of the security rules and the unification of insolvency rules. In addition, the EU Commission will promote individual investment in pensions and long-term investment, including through reform of financial reporting.

The EU Commission has set the roadmap for its banking and financial policy for the years 2021 to 2024. The action plan presented is already taking concrete form, notably with the opening of public consultations on long-term investment funds. It is essential for companies of the banking and financial sector to strengthen their presence at the European institutions in order to provide their input into the development of the Capital Market Union’s action plan.

Alber & Geiger can put its expertise in European affairs at your disposal in order to make your position in the European institutions prevail.

II. EU to regulate digital finance

The digitalisation of the financial sector has been identified as a priority for the EU Commission, which in the coming months will adopt forward thinking actions to prepare the future of the digital sector. The digital strategy for the financial sector outlines the EU’s actions and ambitions for the coming months and years.

Concretely, the strategy has four main axes: tackling the fragmentation of the digital single market for financial services, reviewing the regulatory framework to make it fit to the digital transition, promoting data-driven innovation, and addressing the challenges linked to the sector digitalisation. Several regulations to this effect are already in the making, in particular a directive on crypto-assets which aims to establish a tailor-made regime for economic operators, new rules for IT services to prevent the risks of cyber-attacks, as well as a new strategy for retail payments.

With the adoption of this strategy, the EU Commission has set itself a roadmap that schedules a thorough overhaul of the legislation and regulatory framework of the financial and digital sector. These regulations are going to have an important impact on the European and international financial sector, so it is vital for companies concerned to engage with European decision-makers.

Alber & Geiger can use its extensive experience in EU affairs to strengthen your position in these regulatory procedures.

III. EU presents greener and more digital consumer law

By presenting its new Consumer Agenda, the EU is laying the foundations for its vision of consumer policy until 2025. The Communication schedules more than 22 actions aimed in particular at helping the green transition and adapting legislation to digital commerce. It is also scheduled to strengthen the enforcement of consumer rights and enhance international cooperation.

In more detail, the EU Commission will take regulatory measures to change the information rules with the explicit aim of combating greenwashing. It is also scheduled to revise the directive on the sale of goods in order to give a right to repair to consumers, as well as to revise the general directive on product safety. In addition, the EU Commission will boost the international dimension of its consumer law: it plans to strengthen collaboration at multilateral level, but also at bilateral level as an action plan with China is listed as the EU Commission’s priority.

In less than 5 years, the EU Commission intends to re-evaluate almost all of its consumer legislation in order to strengthen its role in the green transition and adapt it to the changes brought about by digital technology. the EU Commission will take measures that will change consumer law, which will have an impact on the entire goods and commerce industry, including the digital sector. It is central for the sectors concerned to participate in the review of current regulations as well as in the development of future regulations in order to shape the new European consumer law.

Our team can guide you through the regulatory review process in order to maximise the impact of your positions in the European decision-making process.

IV. EU adopts Class Actions

On 24 November, the European Parliament adopted the Collective Redress Directive (CR Directive), ending a process started in 2018 following the “Dieselgate”. The CR Directive defines the minimum criteria for adopting class actions throughout the EU.

In concrete terms, the CR Directive allows consumer associations to collectively sue companies that have caused them harm through the class action mechanism. Class actions may be brought in all areas relating to data protection, financial transactions, travel and tourism, energy, communication and all infringements of general consumer law. Unlike the US, EU class actions will not be able to seek punitive damages and will have to be limited to repairing the damage, but at the same time the costs to the plaintiffs will be limited in order to promote its use. Another limitation is that only consumer associations with a recognised interest in the field may be qualified entities able to launch class actions.

In summary, this directive heralds an important change in European consumer law by encouraging the use of class actions. Member States are free in defining the mechanisms at national level as the Directive sets only minimum standards. Member States have up to two years to define the class action procedures and these must be applicable at the latest 6 months after this deadline. The EU in the midst of a major paradigm shift in the field of consumer protection and large portions of the economy are potentially concerned by future class actions.

Our expertise will enable you to make your interests prevail here.

V. The EU Digital Service Act (DSA)

By introducing the Digital Service Act (DSA), the EU Commission announces a radical change in the way digital services operate and in their liability rules. The aim of the EU Commission is to make the major digital services more transparent and, above all, more active in the fight against illegal content by increasing the liability rules of the digital services.

The DSA redefines the transparency obligations of digital services as they will now be obliged to provide more information at the request of users about targeted advertisements. The biggest change, however, are in the liability rules for digital services. The prevailing rule was that services were hardly ever liable for hosted content. From now on, digital services may be sanctioned for hosting illegal content, unless it is proven that they have acted expeditiously to remove this content. Digital Service Coordinators will be established at the national level to monitor the internal procedures set to improve the removal of illegal content.

All the digital services of more than 45 million users are directly concerned by the DSA, which will radically change the way they operate. If they do not comply with the new regulations, the penalties may be as high as 6% of total business income. The DSA will have an unprecedented transformative impact on the way digital services operate.

Our expertise in EU affairs and our contacts with the EU institutions and Member States will enable you to represent your interests in the forthcoming discussions.

VI. The EU Digital Market Act (DMA)

The ambition of the EU Commission with the Digital Market Act (DMA) is clear: to force the Large Online Platforms (LOPs) to change the way they operate as it aims to remedy anti-competitive practices. It is set to be the most important and ambitious regulation in the digital field for years.By introducing the Digital Service Act (DSA), the EU Commission announces a radical change in the way digital services operate and in their liability rules. The aim of the EU Commission is to make the major digital services more transparent and, above all, more active in the fight against illegal content by increasing the liability rules of the digital services.

In concrete terms, the DMA consists of two pillars: an ex-ante list of prohibited or strictly regulated practices, and a Market Investigation Tool. This ex-ante list will be divided into several categories. The blacklist simply prohibits a number of practices, such as not sharing the collected data with third parties, the collection of data beyond what is necessary and limitations on self-referencing. The Market Investigation Tool should enable the Commission to enrich the ex-ante list of prohibited practices as well as the list of LOPs. Although DMA focuses on LOPs, we are on the verge of a radical change in the functioning of the digital market as a whole.

The DMA aims to change the structure of the digital market by strengthening the EU Commission’s anti-trust powers in an unprecedented way. The first companies concerned are the LOPs, which will have to change some of their practices in depth. These LOPs are the GAFAMs, but all platforms with significant market power are also potentially concerned. Other smaller digital companies are also concerned as they will now be able to challenge anti-competitive practices much more easily and with faster effects.

With a proven track record of success, Alber & Geiger can help you bring your case directly to European decision-makers.