I.EU to target pre-installed phone applications
The Digital Marketing Act (DMA) is currently processing through the stages at the EU Parliament level. Much like the GDPR, the DMA will have direct effect throughout all Member States and is intended to be a revolutionary piece of legislation for the modern technological age that seeks to protect consumers from some of the unsavoury practises of the multi-national tech giants. Amongst the proposals for reform being looked at currently are measures, which would prevent these corporations from pre-installing their own applications such as Google Chrome or Microsoft Outlook onto every one of the individual devices manufactured by them.
There are a significant proportion of voices who believe that the capacity to do this affords these huge corporations with a disproportionate competitive advantage, which leads towards them behaving like oligopolies, given in practise how so few phone users reconfigure these basic applications once they have begun using each device. The momentum for introducing provisions to this effect in the DMA has been accelerated by pronouncements on the part of both the Body of European Regulators for Electronic Communications and the UK Competition Authority, where both voiced concerns about the impact on effective choice for consumers by allowing these corporations to continue pre-install their own applications.
Many believe a decision to introduce provisions to this effect would be a positive step in tandem with other efforts by the EU to cut down on oligopolistic tendencies on the part of these corporations. In this respect many would point to the decision by the EU Commission to fine Google more than €4 billion in July 2018 for their practise of allowing the biggest manufacturers to exclusively pre-install Google products on their devices. Many also believe legal provisions to this effect would enable consumers and broader society to effectively tackle the data harvesting business models of corporations such as Google, which largely rely on the consumer’s use of their pre-installed applications.
Alber & Geiger can use its extensive experience in EU affairs to strengthen your position in the legislative process.
II.EU to targets anti-competitive foreign subsidies
In May 2021, the EU Commission announced plans through which legal instruments would be introduced to prevent the practise of third countries affording subsidies to many of its successful companies within the EU Single Market, which had the effect of negatively distorting competition.
In the White Paper released by the EU Commission, it suggested that three different tools would be implemented which would empower authorities to identify, investigate and penalise subsidies of this nature. These tools would be specified to distinguish between differing sorts of subsidies such as those in the sphere of mergers and acquisitions, those which generally facilitate the gaining of competitive advantages for companies as a result of subsidies, and those which distort public tenders.
This latest White Paper follows a similar trend from summer 2020, when EU Competition Commissioner also presented a white paper detailing the EU Commission’s plans to level the playing field with regards anti-competitive subsidies. The overarching goals of both these plans is to solidify a means of redress for honest EU companies being put a financial disadvantage as a result of these practises by third country governments. There is some concern, however, in the wake of the publication of the White Paper that the three differing instruments will have the effect of creating loopholes, confusing overlaps and could ultimately create more legal uncertainty. There are also concerns regarding the ultimate effectiveness of these tools given the likelihood that much of the relevant evidence in these investigations will be located beyond the EU’s jurisdiction. The consultation period on the proposal closed in mid-June 2021, and could ultimately take up to two years to be fully ratified by the Council of the EU and the EU Parliament.
Our expert team can help influence opinions and agendas on EU competition matters.
III.EU to support geothermal technology
The Renewable Energy Directive first drafted in 2009, has long been the showcase legislative instrument through which the EU has demonstrated its commitment to creating ambitious reforms throughout the EU with respect to climate action. The Directive in its original form contained policy initiatives and guidance that sought to ensure that the EU would reach its goal of 32% of energy coming from renewable sources by 2030. The Directive was recast in 2018 shortly in the wake of the agreement of the Paris Climate Accord. Whilst in many respects the Directive has been successful, many in the geothermal energy sphere has been left disappointed by the Directive’s effectiveness in terms of encouraging use of this form of renewable energy.
However, in the wake of proposals under the European Green Deal, consideration is once again being given to revisiting the Directive with the aim of removing the many structural barriers that exist with regards to harvesting geothermal energy. These barriers are significantly acute in terms of the costs that exist for producers regarding exploration and drilling. Two key features of a yet again recast Directive that could help to reduce structural prices include provisions for de-risking measures and power purchase agreements (PPA).
PPAs, in fact, seek to reduce the burden that is placed on businesses alone in engaging in the sophisticated and risky work associated with harvesting and creating the necessary infrastructures associated with geothermal energy. A PPA would have the potential to create a balanced funding environment, whereby businesses would at first pay for the installation and maintenance of the necessary harvesting infrastructure. That said, there would also be a firm contractual commitment on the part of consumers to pay for this energy normally over the course of a contract lasting decades.
Our team can guide you through the legislative changes being considered in order to maximise the impact of your positions in the European decision-making process, and to put you in a position to benefit from them.
IV. EU approval of the Covid recovery fund
May 2021 saw the final approval given to the historic €672 billion EU Covid recovery fund (composed of grants and loans) that was agreed on by EU leaders in July 2020. The simultaneous ratification of the “Own Resources Decision” will enable the EU Commission to finance the fund by the EU Commission borrowing directly from the money markets on behalf of the EU as a whole, and later distributing its borrowing to Member States. It is envisaged the borrowing will be repaid by 2058.
Since the point of agreement at an EU Council summit last summer the specifics of the agreement has been debated and scrutinised by the parliaments of the respective Member States in the intervening time. In Poland in particular, approval of the project was significantly delayed by disagreements within the ruling coalition as to how exactly to distribute the fund internally within Poland. Disappointment may well exist within some quarters of the EU given the almost year long delay that has followed between agreement and final approval, particularly in the face of the urgent circumstances caused by the pandemic. Disappointment may well also exist that the fund has already been somewhat diluted from the original figure of €750 billion to €672 billion.
However, now finally with the ratification of the Polish and Austrian parliament all pieces seem to be in place to ensure that the fund will begin being distributed from this July. Large proportions of the fund will be earmarked for larger EU economies that took significant heavy hits during the pandemic such as Italy, France and Spain. The fund (like its US equivalent) also provides significant business opportunities to implement modern reforms to economies such as the ring fencing of 37% of the fund for projects related to climate action, and a further 20% will be targeted at smoothening the transition to a new digital economy.
Alber & Geiger can use its extensive experience in EU affairs to strengthen your position so as to capitalize from projects such as these.
V. EU-China investment agreement
In May 2021, the EU Parliament voted overwhelmingly to halt any legislative progression of the Comprehensive Agreement on Investment (CAI) that had been agreed between China and the EU until such point that Chinese officials agreed to lift sanctions they had imposed on five MEPs. These sanctions are regarded as a reaction to sanctions imposed by the EU Parliament on Chinese officials believed to be connected with the internment of the Chinese Uyghur population in conditions that fall far below human rights standards.
The halting of the CAI ratification process is indeed a considerable blow given that the deal was only agreed in principle as recently as December 2020. It had been hoped that the CAI would prove a significant milestone step in the amelioration of trading relationships between the EU and the traditionally protectionist Chinese markets. Under the terms of the CAI, China had agreed to allow much more external access to their markets and had also agreed to provisions which would seek to create a more levelled trading relationship between the EU and China, in addition to provisions which would commit China to improving their sustainable development mechanisms and improve their labour rights laws.
This stalling of ratification of the CAI looks unfortunately like it could well be a pro-longed delay, given how intrinsically such a deal is connected to the broader geo-political facts relating to EU-China relations. Neither side in their comments so far seem prepared to compromise first over the lifting of the sanctions, and hence the future of the CAI currently is very much uncertain.
Alber & Geiger can put its distinguished international relations team at your disposal to help you further understand the current state of EU-China trading relations.
VI. EU Commission to reduce carbon heavy imports into EU
In June 2021, media outlets received leaks indicating the EU Commission’s plans to reduce carbon imports into the EU by placing tariffs on goods, which traditionally carried large carbon footprints. Many of these goods are related to the construction and infrastructure sectors of the global economy such as steel, cement and electricity. The obtained information suggested that these tariffs will be manifested through a tool known as the carbon border adjustment mechanism, which will be formally presented to the public by the EU Commission in mid-July.
It is hoped that the introduction of these tariffs will help facilitate the EU as a whole in matching the carbon reduction ambitions of many of its competitors. It is expected that the EU Commission will emphasise that exemptions from the tariffs will be made for both EFTA Member States within the Customs Union such as– Iceland, Liechtenstein, Norway and Switzerland, and for economically developing countries. The tariffs, therefore, will predominantly be designed to penalise imports from developed countries who have chosen not to take similar wide ranging steps to reduce their carbon prints, so hence there is no guarantee that such goods coming from close EU partners like the United States or the United Kingdom will be exempt from these tariffs.
EU based companies importing these kinds of targeted products are expected to be required to obtain digital certificates, which contain a record of the carbon emissions on the products they are importing, thereafter tariffs will be placed on imports with a suitably high carbon foot print. This obligation to obtain this license will be an additional obligation in this area, given that EU based power companies are already required to obtain permits for work that generates large amounts of carbon emissions. The cost of these certificates are expected to be closely linked to the pre-existing permits. These plans are expected to be phased in on a gradual basis from 2023, and will be fully operational from 2026.
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