insight brussels april 2013

| Insight Brussels | 0

April 2013 n°12

A MONTHLY ALERT ON KEY EU POLICY DEVELOPMENTS AFFECTING OUR CLIENTS


N°12 – 25th April 2013 SECTORAL POLICIES

1. Agriculture and Fisheries ........................................................................................................................................... 2

2. Defence .............................................................................................................................................................................. 3

3. Energy and Environment ........................................................................................................................................... 3

4. Financial Services .......................................................................................................................................................... 5

5. Food and Beverage ....................................................................................................................................................... 5

6. Healthcare and Pharmaceuticals ............................................................................................................................ 7

7. Information and Communication Technology .................................................................................................. 8

8. Media ............................................................................................................................................................................... 10

9. Sports and Gambling ................................................................................................................................................. 10

10. Transport .................................................................................................................................................................... 11

CROSS-SECTORAL POLICIES 11. Competition ............................................................................................................................................................... 12

12. Consumer .................................................................................................................................................................... 14

13. Intellectual Property and Copyright ................................................................................................................ 15

14. Research and Development ................................................................................................................................. 15

15. Taxation ....................................................................................................................................................................... 16

16. Trade ............................................................................................................................................................................. 17



1. Agriculture and Fisheries CAP reform now enters the final three-way talks’ stage After the European Parliament finalised its position on the reform of the Common Agricultural Policy (CAP) on 13 March, the Council of the EU succeeded in reaching agreement on a negotiating stance on 19 March. The CAP reform now enters the three-way talks stage, with 30 meetings being scheduled to reach political agreement between the European Commission, the European Parliament and the Council of the EU for the Agriculture Council on 24-25 June. Starting on 11 April, talks promise to be tough, in particular on internal convergence (redistribution of aid within countries to make the CAP fairer), greening (sanctions in the event of failure to comply with the greening provisions related to crop diversification, maintenance of pastureland), direct payments (capping of farm subsidies), common market organisation (end of sugar quotas by 2017 and new system for the authorisation of wine plantation) and support to young farmers (obligatory aid). Most of the EU-based lobbies are expected to be active during this final stage of negotiations. The EU’s biggest farm lobby group, Copa-Cogeca, as well as the lobbies for sugar manufacturers, sugar users, starch industry, wine producers and environmental organisations are now in the homestretch to support the inclusion of more ambitious measures in the final package. Fisheries: slow progress in negotiations on a reform of the Common Fisheries Policy Inter-institutional negotiations on a reform of the Common Fisheries Policy (CFP) are progressing slowly. A two-day trialogue meeting between the European Parliament, the Council of the EU and the European Commission on 8 and 9 April helped to make small progress on a number of issues, such as the external dimension of the CFP and fisheries enforcement. On more controversial issues, such as maximum sustainable yield (the level of fishing that allows species to continue reproducing), discard ban, multiannual plans and stock management, discussions revealed that the respective institutions’ positions are still too far removed from each other to reach an agreement by June. Fisheries: consultation on a review of state aid Regulations On 3 April, the European Commission launched a public consultation to review the rules on state aid to the fisheries sector. In particular, it seeks to collect views on a review of two Regulations: the de minimis Regulation (Regulation 875/2007), which concerns the minimum aid that can be paid to fishermen without there being an obligation to notify the European Commission, and the block exemption Regulation (Regulation 736/2008), which relates to state aid to small and medium-sized enterprises active in the production, processing and marketing of fisheries products. The two Regulations will expire on 31 December 2013, which raises the question of whether they should be renewed and, if so, under what conditions.

S E C T O R A L P O L I C I E S



The consultation comprises two questionnaires – one of a general nature mainly targeting citizens, and one of a more specific nature primarily targeting public authorities and organisations – and will last until 17 June. Fisheries: NGOs call on the Council to end overfishing In a letter written to the Member States’ Fisheries and Environment Ministers, more than 200 civil society organisations have called on the Council to back the European Parliament for the adoption of measures to end overfishing by 2015 and to ensure that fish stocks are restored by 2020. The Council of the EU, however, has rejected the adoption of such measures. The organisations, among them most of the environmental NGOs, recall that the EU is legally obliged to restore fish stocks to a sustainable level under the 1982 United Nations (UN) Convention on the Law of the Sea and that it has made corresponding commitments at the 2002 Johannesburg Earth Summit, which were renewed at the Rio+20 conference in June 2012.

2. Defence EU steps up fight against firearms trafficking On 22 March, the European Commission proposed to ratify the United Nations (UN) Firearms Protocol. This Protocol is the first global instrument to combat organised crime and firearms trafficking, and aims at strengthening cooperation against illicit manufacturing and trafficking of small arms. It was negotiated and signed by the European Commission on behalf of the EU already in 2002, but the actual ratification was postponed, because EU legislation had to be updated first and brought in line with the Protocol’s provision. To this end, the EU subsequently adopted two legislative acts:

- Directive 2008/51/EC, which sets the rules on controls by Member States on the acquisition and possession of firearms, and on their transfer to another Member State.

- Regulation 258/2012, which establishes requirements for exports, imports and transit licensing, and makes it easier to track weapons, with the exception of military weapons.

The Council of the EU should now adopt the proposal to ratify the UN Firearms Protocol, with the consent of the European Parliament. In addition, the European Commission will present before the end of the year a Communication on how to limit the threat of firearms to the EU’s internal security.

3. Energy and Environment ETS: The European Parliament rejects the “back-loading proposal” In a very tight vote (334 to 315 and 63 abstentions), MEPs rejected on 16 April the European Commission’s proposal to delay the auctioning of several millions of carbon credits in the EU’s emissions trading scheme (ETS). In an immediate reaction, the carbon price fell by as much as 45% to a record low of €2.63, before rising slightly to nearly €3. The proposal planned to back-



load the auctioning of 400 million credits in 2013, 300 million in 2014 and 200 million in 2015, thus increasing the volumes of auctions by 300 million credits in 2019 and 600 million in 2020 in order to increase the current price of carbon. The rejection was supported by most of the Conservative MEPs, who argued that the proposed measures would be equivalent to a manipulation of the market and would destroy the confidence in the trading scheme. Green and Socialist MEPs defended the proposal with a view to achieving the EU climate targets for 2050, supporting on the other hand a long-term structural reform of ETS. Business representatives were divided on the proposed measures. Heavy industry opposed the back-loading proposal, claiming that EU climate policy should better secure a cost-competitive economy. European businesses in favour of an intervention on the carbon market underlined that the unprecedented economic and financial crisis created an ill-balanced pattern of emission allowances, which provides a negative signal to investments in low-carbon technologies. The rejection of the proposal may trigger the risk of being replaced by 27 national climate instruments. While the European Parliament has decided to send the proposal back to its Committee on the Environment for further modifications, the European Commission is now looking for support in the Council of the EU. The Irish Presidency described the European Parliament’s position as disappointing and asked the European Commission not to withdraw its proposal. European Commission launches debate on 2030 climate and energy targets The European Commission presented on 27 March its Green Paper on a 2030 framework for climate and energy policies. This publication is the starting point for a public consultation, allowing interested parties (among them Member States, other EU institutions, industry and relevant stakeholders) to express their views until 2 July on the type, nature and level of potential climate and energy targets for 2030. In autumn, the European executive will analyse the contributions and prepare a proposal with binding measures for early 2014, with a view to adopting it in 2015 after the European elections. The 2030 framework will build on the lessons learnt from previous proposals, which set the goals of achieving by this deadline a 20% share of renewables in the EU's energy mix, a 20% reduction of greenhouse gas emissions (GHG) and a 20% improvement of energy efficiency. On GHG reduction, the proposal aims at aligning the climate and energy targets with the long-term objectives of the 2050 roadmap, setting a reduction of GHGs of between 80% and 95% by 2050. As regards the share of renewables, the European Commission will propose binding objectives with a possible target set at 40% by 2030, while taking into account the potential of each Member State. Consultative Communication to boost the development of Carbon Capture and Storage technologies The European Commission adopted on 27 March a consultative Communication on Carbon Capture and Storage (CCS) to sound out stakeholders on the possible ways for accelerating the development of technologies enabling the capture of CO2 emitted from industrial plants and its storage in underground geological formations. CCS is likely to be one of the necessary mitigation options, alongside renewable energies and efforts for energy efficiency to achieve the 2050



climate targets of an 80-95% reduction of greenhouse gas emissions compared to 1990 levels. Despite the establishment of a legal framework and support mechanisms, the CCS technologies have failed to take off in Europe (more than 20 small-scale demonstration CCS projects are successfully operating in the world, two of which are in Norway, but none on EU territory). The Communication thus summarises the state of play of CCS development and identifies the barriers that have prevented the technology from progressing in Europe at the pace initially foreseen in 2007. The Communication then discusses some of the possible options to promote the timely demonstration and early deployment of CCS in Europe, and to strengthen its long-term business case. Stakeholders' views are welcome on what would be the best policy framework to ensure that the demonstration and further deployment of CCS, if proven commercially and technically viable, takes place without further delay. The consultation is open until 2 July.

4. Financial Services MEPs endorse prudential rules for banks On 16 April, the European Parliament adopted by an overwhelming majority the draft Capital Requirements Directive IV legislative package (CRF IV-CRR), which includes prudential rules requiring banks to own more capital. Accordingly, banks will have to:

- increase their top-quality own capital from 2% to 4.5% of total assets; - have a float of cash to cover liquidity needs for 30 days; and - to provide country-by-country breakdowns of profits and taxes under the new

transparency requirements. After a long and fierce battle with the Council of the EU, the European Parliament also succeeded in introducing a drastic restriction on bankers’ bonuses, which was not covered by the European Commission’s initial draft. In order to curb speculative risk-taking, the basic salary-to-bonus ration will be 1:1. This could be raised to a maximum of 1:2 if approved by at least 66% of shareholders owning half of the shares represented or of 75% of votes if there is no quorum. In order to encourage bankers to adopt a long-term perspective, a minimum of 25% of any bonus exceeding 100% of salary must be deferred for at least five years. The Council of the EU now has to give its formal approval. The new Directive will apply to non-EU banks with branches in the EU and EU branches doing business outside the EU from 1 January 2014, unless its publication in the Official Journal of the EU is delayed until after 30 June 2013. In this case, the date of application would be pushed back to 1 July 2014.

5. Food and Beverage Food fraud: stricter penalties and labels of origin for meat products Health Commissioner, Tonio Borg, announced on 16 April that the European Commission will propose a stricter penalty system to apply across the EU for frauds similar to that of horsemeat



labelled as beef. He specified that the European Commission’s proposal would include persuading Member States to impose penalties proportionate to the economic gain that is made by those who indulge in fraudulent labelling. Borg’s statement came in the wake of the publication of a report on the DNA testing of beef products that was launched last months. According to this report, up to 5% of the 7,000-odd samples taken across the EU have been tested positive for horse DNA. The highest proportion of beef products contaminated with horsemeat was found in France, followed by Greece and Germany. Member States and European Commission experts met on 19 April to discuss the results and to decide whether the testing should be continued. Simultaneously, the European Commission is pressing on with discussions on labels of origin for meat products. By the autumn of this year, it is due to publish a feasibility report for labelling the origins of reconstituted meat products, and an execution Regulation on methods for labelling the origins of the unprocessed meat of pigs, sheep, goats and poultry. Moreover, the European executive should make some process when it comes to the planned schedule for Regulation 1169/2011 on the provision of food information to consumers, which will enter into force on 13 December 2014. This Regulation extends the obligation to indicate the country of origin, which so far only applied to honey, fruit and vegetables, fish, beef and beef-based products, and olive oil, to cover the unprocessed meat of pigs, goats, sheep and poultry, as well as products likely to mislead consumers. In addition, it requires the European Commission to publish by 13 December 2013 an impact assessment on labels of origin for reconstituted meat products, and to produce another such assessment before 13 December 2014 for other types of meat, milk as a product or ingredient, non-reconstituted foodstuffs, products comprising only one ingredient and ingredients constituting more than 50% of a foodstuff. Aspartame: EFSA opinion due on 15 May In its preliminary opinion published on 8 January this year, the scientific panel of the European Food Safety Authority (EFSA) states that there is no need to change the acceptable daily intake (ADI) for aspartame, which was set at 40 mg per kilo of body weight. After the European Parliament and consumer organisations had voiced concerns, the European Commission asked EFSA in 2011 to anticipate the revision of the ADI for aspartame. In a 245-page report, which was subsequently submitted to public consultation, EFSA’s scientific experts demonstrate that aspartame and its breakdown products, such as DKP and phenylalanine, pose no toxicity concerns for consumers at current levels of exposure and that therefore the current ADI does not need to be changed. During the public consultation, which lasted until 15 February, EFSA’s preliminary opinion turned out to be controversial. Some stakeholders denounce the criteria used to select and interpret studies, as well as the EFSA’s lack of independence. They also argue that the ADI is too high and are campaigning for it to be reduced by a factor of 2,000. Businesses, on the other hand, see no need to decrease the ADI for aspartame. At a follow-up meeting on the public consultation on 9 April, an EFSA representative said that due account will be taken of the different expert views when finalising the opinion. This



expected to be adopted on 15 May. The European Commission is not obliged to follow EFSA’s opinion. While the latter’s role is limited to risk evaluation, the European executive is charged with risk management. As such, it may decide to take a different orientation even if EFSA confirms the preliminary opinion of its experts.

6. Healthcare and Pharmaceuticals Pricing of medicine: European Commission tables amended proposal One year after having submitted a first draft proposal for a Directive amending EU rules on the pricing of medicine, the European Commission tabled at the end of March an amended second draft version of the text in order to satisfy MEPs and to appease Member States. The purpose of the Directive is to address the question of medicine prices to further improve the transparency of rules regulating the prices of medicinal products and reimbursements, dating back from 1989. The first draft version of the Directive presented last year proposed to shorten the time limits for pricing and reimbursement. For originator drugs, it reduced the time limit for setting prices from 90 to 60 days and to set a 60-day limit for decisions on reimbursement in order to make innovative medicines available to patients more quickly. For generic drugs, the time limit was reduced to 15 days. In the second draft version of the text, however, the European Commission agrees to the limits called for by MEPs, who voted in February to maintain the time limits in force for originator drugs (90/180 days instead of 60/210) and generic drugs (30/60 rather than 15/30). Moreover, it accepts a large number of parliamentary amendments, which it considers to be providing a pragmatic comprise. Hence, the European executive has shown good will to its co-legislator in order to wrap up the reform. Now it is up to the Council of the EU to adopt a common position. However, there has been hardly any progress in discussions at the Council of the EU due to the politically sensitive nature of the file. Some delegations had refused to even discuss the original version of the text. Although the amended version is more in line with their demands, it is still not enough to reassure them. A Council working group meeting on 25 March agreed to discuss the text, but maintained reservations. The Irish Presidency has thus scheduled another meeting on 26 April. Medical devices: parliamentary rapporteur recommends marketing authorisation Following the presentation by the European Commission in September 2012 of two proposals reinforcing EU rules on medical devices (scrutiny of devices after they have been placed on the market and traceability through a single identification number), the European Parliament’s rapporteur Dagmar Roth-Berendt (S&D, Germany) unveiled on 12 April her draft report, which introduces a centralised marketing authorisation system for high-risk implantable medical devices. It is unclear, however, whether Roth-Berendt will secure the support of her fellow MEPs, because several Conservative and Liberal MEPs have already made clear that they would oppose



such a system. Moreover, the European Commission refuses to consider marketing authorisation, arguing that this would cost too much time and money. Discussions on the proposals will continue in the Council of the EU and within the European Parliament, with the vote by the ENVI Committee being scheduled on 10 June. The aim is to adopt the new provisions by November this year. Contraceptives: EMA to publish opinion in September The European Medicines Agency (EMA) will publish an opinion on the health-risks of several combined oral contraceptives (COC) in September. This was announced by EMA Head of Patient Health Protection Unit, Noël Wathion, at the Parliamentary Environment, Public Health and Food Safety Committee (ENVI) on 26 March. Thus, EMA has bowed to pressure from France, which had asked EMA to review the health risk/health benefit ratio of COCs after a study by the French medicines regulatory agency had raised concerns about the risk of venous thromboembolism (VTE) associated with the use of COCs. In response, EMA has now launched two reviews:

- A review of combined contraceptives containing chlormadinone, desogestrel, dienogest, drospirenone, etonogestrel, gestodene, nomegestrol, norelgestromin and norgestimate. EMA’s Pharmacovigilance Risk Assessment Committee (PRAC) will give a number of recommendations in July. These will be passed on to the Committee for Medicinal Products for Human Use (CHMP), which will adopt an EMA opinion within 30 days. Finally, the European Commission has to adopt a legally binding decision, which will apply in all Member States.

- A review of the Diane 35 pill and other medicines containing cyproterone acetate 2 mg, ethinylestradiol 35 mg. Following a simplified procedure that lasts only 60 days, PRAC is expected to give a recommendation already at the beginning of May. As the medicines concerned are all authorised at national level, PRAC’s recommendation will be passed on to the Coordination Group for Mutual Recognition and Decentralised Procedure for Human Medicinal Products (CMDh), which will adopt a definitive position later in May.

7. Information and Communication Technology European Commission proposes measures to cut broadband installation costs On 27 March, the European Commission presented a draft Regulation aimed at reducing civil engineering costs to boost the development of high-speed broadband networks. Taking into account the fact that digging up streets to lay fibre represents up to 80% of the cost of deploying broadband infrastructure, the proposal calls for water, electricity and gas companies to share their underground ducts with telecom undertakings. The draft Regulation will therefore enable any network operator to negotiate agreements with other infrastructure providers. This measure is said to facilitate the coordination of civil works where, until now, utility companies were often discouraged by regulations in certain Member States to cooperate with other firms.



The proposal also requires that new or renovated buildings shall be fitted out for high speed broadband to be ready for the connection to future networks. Moreover, the European Commission recommends that the procedures for granting permits should be shortened, because these procedures are often long and complex, and differ considerably from one Member State to the other. National authorities will have to give a response to requests for permits within a period of six months and companies that have incurred losses due to non-respect of this deadline will be entitled to ask for compensation from the national authority. The proposed Regulation, which is part of a broader package of measures being rolled out by the European Commission in the coming months to boost the development of a single digital market, is now submitted to the European Parliament and the Council of the EU. Observers underline that Brussels is seeking more power over the telecommunications sector and now wonder whether Member States will accept a Regulation that is directly applicable across the EU and thus less flexible than a Directive. A EU web leaders’ club to inspire young entrepreneurs In an attempt to compete with America’s Silicon Valley, the European Commission gathered together in March some of the most prominent European web pioneers to inspire home-grown entrepreneurs and offer guidance to a new generation of talent. The “Startup Europe Leaders Club” includes founders of the following eight innovative tech companies:

- Tuenti, a Spanish social network whose claim to fame is being the largest “invite only” network with over 12 million users.

- Spotify, a Swedish online music streaming service. - Finland’s Rovio, the designer behind the very popular mobile game Angry Birds that has

now grown into merchandising, advertising and a movie. - HackFwd, the German pre-seed investment company designed to support Europe’s

software developers. - Tech City Investment, the British investment company for leading international

technology firms. - SeedCamp, the British micro Seed Fund for internet technology companies. - The Next Web, the originally Dutch blog on technology news, business and culture. - Skype, the originally Estonian web-based calling service.

By exploring the viability of connecting young entrepreneurs with more experienced professionals, the European Commission seeks to create new business opportunities in the digital sector, while contributing to the economic recovery on the old continent. The Leaders Club is the first stage of a six-part plan to help tech entrepreneurs start and stay in Europe, but also to scale their businesses on a global level. The others elements of the plan include a Startup Europe partnership, based on the Startup America idea, to grant young entrepreneurs access to resources, connections and expertise; an accelerators forum to increase awareness on the existing funding solutions; a campaign aimed at making European venture capitalists more aware of the web’s business potential; a crowd-funding network to link existing crowd-funding platforms (especially those specialising in Web start-ups); and a Tech Entrepreneurs award to celebrate Europe’s finest technology entrepreneurs each year.



8. Media European Commission opens consultation on regulatory independence On 22 March, the European Commission launched a public consultation on audiovisual media regulator independence. This consultation comes within the context of a debate that started at the end of January when the High-Level Group on Media Freedom and Pluralism submitted its report. In this report, the Group particularly stressed the fact that the EU has a crucial role to play in the protection of media freedom and pluralism, and suggests that EU competences on these matters should be extended. Most importantly, however, it emphasised that national audiovisual regulatory bodies should be fully independent. In its consultation, the European Commission asks whether the independence of these bodies could be better ensured by enhancing cooperation between national audiovisual regulatory bodies. This would mean obliging Member States to guarantee the independence of audiovisual regulatory bodies, and to ensure that they exercise their powers in an impartial and transparent way. However, this measure may be opposed by Member States. Simultaneously, the European Commission launched a second, broader consultation to collect views on media freedom and pluralism. In this consultation, it asks stakeholders for their opinion on the High-Level Group’s recommendations, notably the extension of EU competences to act in this area. Both consultations are open until 14 July.

9. Sports and Gambling European Parliament considers draft report on online gambling On 20 March, the European Parliament’s Internal Market and Consumer Protection (IMCO) Committee exchanged views on the draft report on online gambling in the internal market unveiled by rapporteur Ashley Fox (ECR, UK) at the end of February. This own-initiative report is the European Parliament’s response to the European Commission’s Communication on online gambling presented in October 2012. During this exchange of views, disagreements among MEPs became visible. While Fox called on the European Commission to be more forthcoming in sanctioning Member States opting for monopolies when they do not frame correctly betting opportunities or limit publicity, other MEPs underlined that online gaming is not a normal service and thus justifies greater consumer protection which, in many Member States, means the establishment of monopolies. Moreover, some MEPs noted that administrative fees are justified in the name of consumer protection, while Fox made liberal use of the threat of consumers turning to illegal websites if legal operators were faced with high administrative restrictions. Money laundering and the integrity of sport, on the other hand, are given little consideration in the report. In particular, MEPs wish to see attention given to the question of the role of banks and supervisory authorities in money laundering, as well as the question of match fixing, and announced to propose amendments in this regard.



The vote in the IMCO Committee will take place on 29/30 May and in June/July in plenary.

10. Transport On-board liquids restrictions expected to disappear by 2016 On 20 March, an amendment to the 2009 Regulation on the screening of liquids, aerosols and gels (LAGs) at EU airports was published in the Official Journal of the EU, which reduces from 31 January 2014 onwards the restrictions on LAGs that air passengers are allowed to carry in their hand luggage. From that date, passengers in transit in the EU will be allowed to bring on board the LAGs they have purchased in secure zones of airports, and restrictions will be lifted on liquids for medical purposes and for baby food. Restrictions are expected to be totally removed in 2016 for all products, including those purchased outside airports. European airports will have to acquire explosive detectors to make security checks and to meet this deadline. By 30 June 2013, airports will have to submit to national authorities reports on the deployment and use of detection equipment. The only scanners that have been installed in Europe were used in pilot tests and no European airport has actually acquired them yet. The corresponding costs of deployment are expected to impact the ticket prices for travellers. Call for proposals: €66.7 million in 2013 for intermodal freight projects On 26 March, the European Commission published its 2013 call for projects for the Marco Polo programme. Some 30 projects will be granted co-funding facilities varying from 20% to 50% of costs to support plans replacing freight road transport by alternative means, either rail, inland or maritime navigation. Modal transfer, motorways of the sea, traffic avoidance, joint apprenticeship in freight and logistics, and the suppression of barriers to the non-road freight market are prioritised in 2013. The available budget is €66.7 million. Applicants may submit their project until 20 August. The assessment of projects is expected to be finalised in December, before the contracts will be signed by mid-2014.



11. Competition Proposal for and consultation on the revision of the “small” state aid Regulation The European Commission published on 20 March a first draft text for the revision of the de minimis Regulation (Regulation 1998/2006), which applies to small state aid amounts and will expire at the end of the year. After a first consultation of stakeholders between July and October 2012 aimed at providing input for the revision of the Regulation, the European Commission is now collecting stakeholder views on the draft text. Most importantly, the draft text maintains for the period 2014-2020 the ceiling of the de minimis regulation, which established more flexible rules for aid measures below a certain amount that are unlikely to affect trade or competition. For aid measures below this ceiling, the European Commission does not have to be notified or to give its authorisation. It was set in January at €200,000 per undertaking over a period of three financial years, with the exception of the road sector, for which it was set at €100,000. According to the European Commission, the two levels do not need to be changed, because the amount of €200,000 is not reached in the great majority of cases. A higher ceiling, by contrast, would no longer ensure that there is no effect on trade or competition and might therefore involve legal risks. Moreover, the draft text introduces the obligation for Member States to keep a central register of all de minimis aid measures. Currently, they can chose between keeping a register and applying a system of declarations based solely on the information provided by companies. The consultation is open until 15 May. Subsequently, the European Commission will prepare a second draft that will likewise be subject to a stakeholder consultation. Consultation on simplified procedures under the Merger Regulation On 27 March, the European Commission launched a consultation inviting the public to comment on a proposal to simplify certain procedures for notifying mergers under the Merger Regulation (Regulation 139/2004). The aim of the proposal is to make EU merger control more business-friendly by cutting red tape and by streamlining procedures. First, the European executive proposes to expand the scope of the simplified procedure, the “light” version of the merger review procedure, by raising the market share threshold for treatment under the simplified procedure for mergers between firms competing in the same market from 15% to 20%. For mergers between firms active in upstream and downstream markets, such as between a producer of car parts and a car manufacturer, the threshold would be raised from 25% to 30%. Second, it proposes to reduce the amount of information required to notify mergers. In particular, in cases that do not fall under the simplified procedure, merging firms would only have to submit detailed information for those markets where their share exceeds the threshold for applying the simplified procedure.

C R O S S - S E C T O R A L P O L I C I E S



The proposed initiative is a technical reform in terms of how dossiers are treated within the existing framework of merger controls and does not entail an amendment of the Merger Regulation itself. Interested parties have until 19 June to give their opinion. European Commission opens investigation into MasterCard’s interbank fees Concerned that some of MasterCard’s interbank fees and related practices may be anticompetitive, the European Commission opened on 9 April formal proceedings to investigate whether MasterCard is hindering competition in the European Economic Area (EEA) with respect to payment cards, thus violating EU antitrust rules. The inquiry concentrates on multilateral interbank fees (MIF) for payments made by cardholders from non-EEA countries, but also concerns rules on cross-border acquiring in the MasterCard system and related business practices, such as the obligation for merchants to accept all types of MasterCard payment cards, which add to the European Commission's competition concerns. There is no legal deadline to complete antitrust investigations, the duration of which is determined by a number of factors, among them the complexity of the case and the extent to which the company concerned cooperates with the European Commission. In addition to these antitrust enforcement actions, the European executive has announced that it will propose before the summer legislation on MIF for card payments. Competitors file formal complaint about Google with the European Commission On 8 April, the European Commission received a complaint about Google’s Android operating system for mobile devices. The complaint was filed by FairSearch, a coalition that brings together 17 of Google’s competitors, among them Microsoft and Nokia. According to FairSearch, Google is using the Android software in a way so as to build advantages for Google apps. The European Commission has not yet decided whether to open a formal investigation. However, Competition Commissioner, Joaquín Almunia, emphasised that any decision on Android would be independent of the European Commission’s investigation into Google’s search practices, which was opened in November 2010 and is now moving to the final stages. In this case, both the European Commission and Google hope to reach an amicable settlement in order to avoid a drawn-out process. To this end, Google offered in January a formal set of remedies to the European Commission, proposing notably to provide links to rival search engines’ websites and to clearly label its own results. In mid-April, the European executive announced that it has completed its examination of the proposed commitments and that it is now preparing to submit them to a formal market test. If it determines that the commitments resolve competition problems, the European Commission will make them legally binding. Almunia hopes that the case can be closed in the coming months.



European Commission investigates Apple’s commercial practices On 22 March, a spokesperson for Competition Commissioner Joaquín Almunia announced that the European Commission’s competition services are studying information on Apple’s distribution practices for its iPhone and iPads. Although there have been no formal complaints for failure to respect competition, several operators have reproached Apple for its strict commercial policy, which they say imposes a number of uncustomary constraints. Amongst other things, they complain that Apple sets minimum sales quotas over what tend to be three-year periods and seems to force operators to finance TV advertising in exchange for which the retailer’s logo appears at the end of the ad. Apple, on the other hand, argues that its contracts in the EU fully comply with the bloc’s and the Member States’ laws. The European Commission will now check whether this is indeed the case, which however does not necessarily imply the eventual launch of an investigation. In fact, Almunia’s spokesperson argued that Samsung’s growing market position and the success of Google’s Android platform are good reasons to believe that competition is strong in the markets for smartphones and tablets. This makes the launching of a formal investigation seem unlikely.

12. Consumer Possible EU ban on substances worries perfume makers After a study recommending that two ingredients used in some luxury perfumes should be banned due to potential allergic reactions, stakeholders’ resistance against stricter legislation is increasing. The study was issued by the advisory Scientific Committee on Consumer Safety (SCCS) in June 2012. Next to the ban on tree moss and oak moss, the SCCS also recommended to restrict the concentration of 12 substances, including citral, found in lemon and tangerine oils, coumarin, found in tropical tonka beans, and eugenol, found in rose oil, to 0.01% of the finished product. It estimates that 1-3% of Europeans are allergic or potentially allergic to ingredients found in perfumes and considers this number to be high enough to justify concerns. The perfume industry, on the other hand, argues that the whole perfumery sector would be shaken up if the European Commission decided to follow the SCCS’s recommendations. According to Christopher Sheldrake, perfume-maker and Director of Research and Development at Chanel, perfume-makers would be left with a much smaller palette of ingredients, which would imply that the perfumes of leading brands would never smell the same. The European Commission that started to consult Member States, the industry and consumer groups is currently reflecting on how to implement the SCCS’s opinion. It is expected to decide on the SCCS’s recommendations before the summer.



13. Intellectual Property and Copyright European Commission proposes to update legislation on the registration of trade marks On 27 March, the European Commission proposed a package of initiatives to update the almost 20-year old legislation on trade marks. The proposed reform aims at making trade mark registration cheaper and at providing better protection against counterfeiting. To this end, it introduces the principle of "one-class-per-fee" that will apply to both Community trade mark applications and national trade mark applications. While the registration fee covers up to three product classes under the current system, the revised system would enable businesses to register a trade mark for only one product class, so that they would have to pay substantially less when seeking to obtain protection for just a single product class. Moreover, the proposed reform intends to further harmonise national procedures for the registration of national trade marks by using EU procedures as a benchmark, and to make easier cooperation between national offices and the EU’s Trade Marks and Designs Registration Office (OHIM) by charging the latter with steering such cooperation. The proposed package contains three specific initiatives:

- a recast of the 1989 Trademark Directive; - a revision of the 1994 Community Trade Mark Regulation; and - a revision of the 1995 Commission Regulation on the fees payable to OHIM.

The recast of the Trademark Directive and the revision of the Community Trade Mark Regulation are legislative proposals to be adopted by the European Parliament and the Council of the EU under the ordinary legislative procedure. The European Commission hopes for entry into force in spring 2014 and application in member States in 2016. The revision of the Fees Regulation, by contrast, will be adopted by the European Commission as an implementing act, which should take place before the end of this year.

14. Research and Development Innovation Union Scoreboard 2013: EU more innovative, but gap between countries widens Despite the economic crisis, innovation performance in the EU is improving every year, but the gap between Member States continues to widen. This is the result of the European Commission Innovation Union Scoreboard 2013, which provides a comparative assessment of the Member States’ research and innovation performance. While the most innovative countries – Sweden, Germany, Denmark and Finland – have improved their performances, other Member States have shown no progress or even regressed. The three Baltic states – Latvia, Lithuania and Estonia – have progressed the most since last year. According to the European Commission, innovation growth drivers include SMEs and the commercialisation of innovations. Yet, the EU executive also notes that the decline in business and venture capital investment between 2008 and 2012 has affected negatively the innovation performance.



In international comparison, the EU is still lagging behind. In Europe, Switzerland continues to outperform all Member States; on a global scale, South Korea, the US and Japan have a performance lead over the EU. European Commission wants to make the EU more attractive for international students and researchers In order to turn the EU into a highly attractive destination and to fill skilled labour positions, the European Commission proposed on 25 March to modify two Directives on students and researchers, and to replace them by a single Directive. Each year, over 200,000 students and researchers move to Europe temporarily, but often have to face bureaucratic hurdles. Current rules for obtaining a student visa or a residence permit are complex, procedures can be lengthy and vary considerable across Member States, which makes moving from one Member States to another difficult and reduces the appeal of the EU. The new Directive sets clearer, more consistent and transparent rules across the EU. In particular, it puts a 60-day time limit for Member States’ authorities to decide on visa or residence permit applications. Simpler and more flexible rules also aim at increasing the possibility for students, remunerated trainees and researchers to move within the EU. In addition, students and researchers will under certain conditions be able to remain for a period of 12 months on EU territory after finalisation of their studies/research in order to identify job opportunities or set up a business. Finally, the protection of additional groups of non-EU nationals who are not covered by existing legislation, such as au pairs, would be improved. The proposal will now be discussed by the European Parliament and the Council of the EU. The European Commission expects that the Directive enters into force in 2016.

15. Taxation UK takes legal action against financial transaction tax The UK has decided to bring an action against the proposal for a financial transaction tax (FTT) before the European Court of Justice. This was confirmed by Chancellor of the Exchequer, George Osborne, on 19 April outside the G20 Finance Ministers’ meeting in Washington. The European Commission adopted on 14 February a proposal for a Directive implementing enhanced cooperation in the area of financial transaction tax by the eleven Member States that have decided to participate in the future “FTT zone”. The European executive proposes a tax of 0.1% on transactions on shares and bonds, and of 0.01% on derivatives transactions, based on two principles: the place of residence of the financial institution and the place of issuance of the financial products. All financial transactions having an established economic link with the eleven Member States would be taxed, irrespective of where the transaction actually occurs. The UK is particularly concerned about the extraterritorial effects of this proposal, arguing that it does not respect the sovereignty of non-participating states given that their own financial institutions will have to impose the FTT. This could add an estimated burden of around €4.7



billion to the cost of issuing UK government debt in 2012. Other non-participating Member States, such as Hungary, share the UK’s concerns. Even the eleven Member States themselves have so far failed to agree on the model they want to use. Informal and formal meetings that are being held to discuss the FTT have not yielded positive results, with several Member States having called for exemptions to the application of the tax. For example, Italy’s permanent representative to the EU, Ferdinando Nello Feroci, announced on 19 April that the country is prepared to use its veto if it does not win agreement that trade in sovereign bonds be exempted from the new tax. In addition, the European Parliament, which has begun to review rapporteur Anni Podimata’s (S&D, Greece) report on the European Commission’s proposal on 11 April, plans to propose a number of amendments. The European Parliament will vote in July and the European Commission hopes that the 11 Member States reach an agreement by the end of September, so that the FTT can apply as of 1 January 2014. In view of the trouble surrounding the tax, however, it is very unlikely that this ambitious timetable will be met.

16. Trade European Commission proposes to modernise EU’s trade defence arsenal On 10 April, the European Commission presented its plan to review the EU’s trade defence instruments dating back from 1995. The plan will modernise EU rules on fighting unfair competition from dumped and subsidised imports from third countries. With the proposed measures, the European Commission wants to remove the uncertainty for importers by informing them about any provisional anti-dumping or anti-subsidy measures two weeks before the duties are imposed. Moreover, it proposes to reimburse importers of duties collected during the review period of trade defences when coming to the conclusion at the end of each review that there is no need to maintain them. The legislative proposal also offers greater protection for European businesses by enabling the European Commission to launch its own investigations into alleged unfair commercial practices without having to receive a complaint from the industry (European companies will then be encouraged to cooperate without having to fear trading partners’ retaliation). Finally, the EU would be entitled to use its right under World Trade Organisation (WTO) rules to impose higher duties on imports from countries that use unfair subsidies and create structural distortions in their raw material supplies and prices. The package of measures comes along with the presentation of four guidelines to complement the understanding of EU’s trade defences (on expiry review of trade defence measures; EU interest test; the calculation of an injury margin; and the choice of an analogue country), and to improve transparency and knowledge about the complex and technical aspects of the investigations. The European Commission expects that the proposal will be more successful than its predecessor, a package presented by Lord Mandelson six years ago that was rejected for being too ambitious. The European executive hopes that the new rules will be adopted before the European elections in May 2014.



For further information please contact: Leonardo Sforza ([email protected]) Romain Seignovert ([email protected]) Klas Landelius ([email protected]) Andrea Oechsler ([email protected]) MSLGROUP Brussels, Avenue des Gaulois, 18 – B 1040 Bruxelles Our website: www.mslgroup.com Follow us on twitter for the breaking news updates: @MSL_Brussels

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insight brussels april 2013

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