A&G Newsletter Q1 2022

I. EU to strengthen regulation of crypto

As the widespread adoption of cryptocurrencies accelerates, the European Union is pushing for stronger regulation on the emerging asset class, citing concerns over money laundering and lack of oversight on the sector. Currently, the EU remains one of the laxer regulators of cryptocurrencies, aiding in the adoption and innovation of blockchain technology.

First attempts at serious regulation of digital finance such as cryptocurrencies were proposed in 2020 with the “Markets in Crypto Assets” (MiCA) bill, outlining standards, safeguards, and an increase in supervisory power over digital assets. Further legislations have been drafted regarding anti-money laundering measures such as an increase in customer verification procedures and transfer traceability. However, recent concerns over Facebook’s project of creating an asset pegged online currency (stablecoin) have once again flared up discussion over the economic implications of cryptocurrencies and the need for more concrete regulation on the digital asset.

In 2022, it can be expected that the EU will set its sights on more tangible regulatory frameworks regarding crypto. Late last year, the European Council adopted its position on the MiCa framework, meaning that negotiations in the European Council and European Parliament can now start, prior to the adoption of the text. The new framework promises to continue the facilitation of growth for the modern technology by allowing crypto firms to operate more easily across the European Union. However, the MiCA also aims to protect market competition and the Union’s monetary policy by heavily controlling issuing of asset pegged crypto by private companies, while making institutionalized digitalization easier. Overall, this year promises regulatory changes and commitment to the development of crypto related assets.

Alber & Geiger can advise in matters of consumer and privacy protection in crypto in the onset of the new regulatory package and help you maintain your rights and anonymity.

II. EU to shift towards greener aviation

As part of the overall push towards a greener Europe, Brussels lawmakers are now considering phasing out the exemption on fuel tax for the aviation industry. The current energy tax system dates back to 2006, however is not a fitting policy anymore in today’s regulatory climate, where a sustainable future is a key priority.

The plan to tax kerosene and therefore push airlines towards the development of more sustainable aviation fuels is to occur over a ten-year period, starting in 2023. The European Commission stated in a draft document, that the current exemptions on taxation of such pollutants is ‘no longer coherent with the present climate challenges and policies. A further step towards pushing for a greener aviation sector falls under the ReFuelEU Aviation policy, adopted in late 2021, seeking to gradually increase the percentage of sustainable aviation fuels in aviation fuels by binding jet fuel manufacturers to increasing fuel mixing.

Multiple voices within EU institutions however call the EU proposal too disruptive and are asking for amendments to the legislation for effective implementation without economic distortions. The proposed legislation involving taxation, the unanimous approval of all European Union member states is required, making the passing of such policy a lengthy process, with the aviation industry utilizing lobby support for the amendment of the new proposal.
Alber & Geiger can use its extensive experience in EU Affairs to strengthen your position and propose amendments to maintain the economic viability of the aviation industry.

III.EU rules on the trucking sector

The European trucking sector will face major challenges in the first quarter of 2022, as the EU Mobility Package comes into effect. Adopted in 2020 after over three years of negotiations, the legislation aims to increase the quality of life and working conditions of lorry drivers and decrease unfair competition in the transport sector across the European Union.

The package focuses on a guaranteed minimum pay for drivers in their origin country, a substantial issue because of the international, cross border nature of the transport sector. Further, new rules on working time are included in the package, setting new standards for maximum daily and weekly working hours, and upping the minimum rest period both within transport and between transports. This also guarantees that drivers are eligible to return to their home country during mandatory rest periods, leading to an increase in quality of life for long-haul lorry drivers. The newly adopted legislation aims to fight ‘letterbox’ companies, which are typically registered in administratively cheaper countries, but operate almost exclusively outside of the establishment country. Here, the new rulings mandate the return of trucks to their country of origin at least every eight weeks.

Even though the package has just been finalized by the EU, member countries with large road transport sectors have already filed for the suspension of the measures. These countries, including Bulgaria, Hungary, Poland, and Romania, are citing the economic impact of the additional measures to local businesses, potentially leading to heightened unemployment and sector shrinkage due to the increased costs associated with the mobility package. The ruling by the Court of Justice of the EU is expected later this year.

Our experienced team can help you maximize the impact of your position in the European decision-making process and put you in an advantageous position to achieve your agenda.

IV. EU regulation of artificial intelligence

In April 2021, the European Union unveiled a new benchmark regulatory framework on artificial intelligence (AI), with the aim of specifying the use of AI systems and addressing risks and accompanying concerns about the technology. This first ever attempt to enact horizontal regulation of AI seeks to codify the standards of the EU trustworthy AI paradigm, requiring legal, ethical, and robust artificial intelligence application.

The approach taken by the European Commission is one of risk-based assessment and classification of artificial intelligence use. Limited risk systems, for example, operating with human contacts such as chatbots or biometric categorization systems, would be subject to a limited set of transparency obligations under the new law. High-risk systems, on the other hand, such as ones operating with impact on human safety or fundamental rights, would face strict regulation, transparency requirements and regular auditing procedures.

As of November 2021, the legislative proposal is awaiting a draft report on the European Parliament and European Council, followed by the vote and trialogue on the text. Seeing as this proposal is the first of its kind, the developments in this sphere will have major influence on shaping legislation of AI worldwide. And while there is general support towards the commission proposal, experts and stakeholders alike are already calling for amendments and revisions of the benchmark legal framework.

Alber & Geiger can use its expert team on legislative matters to strengthen your position and capitalize on AI related projects, setting international standards under the new legislation.

V. EU to assess grocery delivery services

On-demand grocery delivery services such as ‘Getir’, ‘Gorillas’, or ‘Flink’ are increasingly coming under pressure by both National and Regional Lawmakers. These ultra-fast delivery services saw dramatic growth during the last few years due to the corona pandemic. Lockdown regulations and fears of getting sick popularized these services, promising grocery delivery, sometimes within 10 minutes of ordering. The growth of such companies, however, also led to the emergence of ‘dark stores’, distribution hubs for these services in and around popular neighbourhoods.

All over the European Union, cities have taken increased notice of these dark stores, with both citizens and authorities complaining about the nuisance and hazards these distribution hubs pose. Constant restocking of the de facto warehouses, noise and heightened traffic hazards are only some of the issues cities are experiencing, leading to growing discontent. An increasing number of cities have now taken measures against such services. Amsterdam and Rotterdam for example, have issued a one-year freeze on the opening of new dark stores, halting the growth of the expanding companies. The French city of Lyon further denied the opening of dark stores entirely in 2021, citing disturbances of public space and safety.

The current situation clearly mirrors the initial emergence of services like Uber and Airbnb a few years ago, and cities will likely follow suit when it comes to protecting local interest. On an EU scale, there has been little coherent reaction, although the companies involved have already voiced the desire to expand all throughout the union. It can be expected that these delivery services will heavily advocate for the benefits of their services and positive effects on employment and consumer choice, however, some companies have already noted their willingness to cooperate and find mutually acceptable solutions with European Cities.

Our team can assist you in getting ahead of concrete provisions of EU regulations to tailor them to your business interests to the highest possible extent.

VI. EU targets alcoholic beverages

The European Union’s flagship food policy, the Farm to Fork (F2F) strategy, has taken large strides towards the ideation and implementation of greener and more sustainable food policy, both in terms of producers and consumers. Harmonized food labelling has, of recent, been part of that discussion. However, proposals for implementing nutritional score labelling on alcoholic beverages containing over 1.2% alcohol has caused increased attention to the topic.

Pushback against universal food labelling initially came with the conception of the Nutri-Score system in 2017 by France. The system was initially introduced to provide clear information to consumers to choose healthy and sustainable diets, by placing a five-colour nutrition label on the front of food packages, ranging from ‘A’ as a good nutritional score, to ‘E’ as a bad score. Since its launch, however, the Nutri-Score system has received harsh criticism because of its ambiguity, potential for manipulation and simplification of nutritional data.

In the latest proposal by the creator of Nutri-Score, alcoholic beverages, which under the 2011 regulation are exempt from providing nutritional declaration, should receive an ‘F’ label on the score system, thus giving it its own last place category. Multiple countries, headed by Italy, as well as anti-Nutri-Score lobby groups, have now come together and voiced their discontent, reiterating the previous flaws of the scoring system and now adding the threat of damaging the European Wine sector.

With the rising pressure on the French system, other labelling schemes, such as Italy’s ‘Nutrinform’ have gained momentum, with advocates placing emphasis on consumer education and scientific data. It is expected that the European Union proposes a universal food labelling policy as part of the F2F strategy in the fourth quarter of this year, but which system prevails is not clear of yet.

Alber & Geiger can aid in the protection of the heritage rich wine industry and use its extensive experience to direct EU opinions towards more suitable solutions.