It’s no surprise since the ruling is in line with previous case law: Yesterday, the ECJ confirmed that EU law precludes general and indiscriminate data retention of its citizens. Federal Justice Minister Marco Buschmann (FDP) reacted enthusiastically to the ruling – and referred to Quick Freeze as an alternative. However, the issue is far from being closed. Data protectionists see a need for discussion – as do some of Buschmann’s coalition partners. Corinna Visser has compiled the many reactions to the ruling – and talked to an expert in IT security law who laments a missed opportunity.
On the famous Grand Place in Brussels, the lights turn off earlier these days- and the energy crisis is also noticeable on the Belgian highway network, which was well lit at night at regular times. Yet Belgium is not in a bad position regarding energy supply. However, the massive rise in energy prices is causing unrest. The country is facing severe protests, and the yellow vests are planning their comeback. “If the European Commission does not intervene, we risk ending up in a real war economy,” says Prime Minister Alexander De Croo. But help from Brussels is not in sight so far, as Eric Bonse reports.
In her State of the Union speech, Ursula von der Leyen addressed a range of topics – but hardly any of them dealt with digitization. Yet there are several important digital projects lined up for the coming period. After an initial overview of the upcoming digital policy projects at the beginning of the month, we present the second part today. On this fall’s agenda are, for example, the negotiations on the Chips Act and the Commission’s proposal for a cyber defense policy. The Commission is currently waiting for the US to take steps on the Transatlantic Data Privacy Framework (TADPF), the new version of the failed Privacy Shield agreement. One of the major points of contention is likely to be the proposal for the CSAM regulation, which would impose an obligation on Internet companies to identify and pass on depictions of sexual abuse of children. There is increasing resistance, especially in Germany.
Unsurprisingly, the European Court of Justice (ECJ) confirmed in its ruling on Tuesday that EU law precludes the general and indiscriminate retention of traffic and location data of its citizens. The ECJ is thus adhering to its previous case law.
The ECJ grants exceptions, for example, if there is a serious threat to national security. In order to combat serious crime, the member states can therefore provide for targeted retention and/or immediate backup of such data, as well as general and indiscriminate storage of IP addresses, while strictly observing the principle of proportionality. This is viewed critically by the Pirate Party in particular, which doubts that all the data retention (VdS) has a measurable impact in the investigation of serious crimes (see study).
The proceedings before the ECJ were brought about by the Munich-based Internet provider SpaceNet, which had filed a lawsuit with the Cologne Administrative Court in 2016 with the support of the Eco Association of the Internet Industry. “After six years of proceedings, we are glad that the issue of data retention has finally been clarified,” commented Sebastian von Bomhard, founder and CEO of SpaceNet, on the ECJ ruling. “Now there is legal certainty again for the Internet industry, our customers, and all citizens.” But in fact, the discussion is not over.
Data retention (VdS) has been controversial since the Bundesrat first called for minimum periods for storing data to fight crime in 1996.
The German law contained significantly reduced obligations for providers: The to-be-stored data was metadata on communication processes. This includes, for example, the time and duration of a telephone call, who made the call or sent an SMS to whom, and the IP address of a device on the Internet. The content of the communication, i.e. the conversation or the message itself or which Internet page was called up, is not stored.
Also not included were so-called over-the-top services such as WhatsApp or Signal, which work on an Internet protocol basis. After a certain period – in the current case between four and ten weeks, depending on the data – the data must be deleted. Before that, competent authorities can demand that the data be handed over for investigative purposes through a court order.
Eco CEO Oliver Süme is relieved that the “ruling was in favor of our fundamental rights.” “Data retention massively encroaches on the privacy of almost all German users and does not even provide any proven added value for law enforcement. On top of that, it is estimated to cost the industry more than €600 million.”
Süme believes that the ruling gives the German government the opportunity to set a political course. “It would be desirable if politicians also seized this opportunity and thus finally created clarity about the obligation to retain data,” he says. “The German government should therefore promptly initiate the repeal of data retention. This would also strengthen civil rights in digital communications and give companies the legal and planning certainty they urgently need.”
Deutsche Telekom argues similarly: “For us, legal certainty in the implementation of data retention is crucial,” Telekom says in response to a query. The ECJ ruling will create greater legal certainty. “It is now up to the legislator to implement these requirements.”
The German government had anticipated the renewed defeat at the ECJ. In the coalition agreement, the governing parties wrote at the end of 2021 that the coalition would develop the regulations on data retention in such a way “that data can be stored in a legally secure manner on an ad hoc basis and by judicial order”.
Nevertheless, not all coalition members are unanimous in their assessment: In a first reaction on Twitter, Federal Minister of Justice Marco Buschmann (FDP) comments: “A good day for civil rights! The ECJ has confirmed in a historic ruling: Data retention in Germany without an obligation is unlawful. We will now swiftly and definitively remove no-solicitation data retention from the law.”
Buschmann is referring to the Telecommunications Act (TKG). A draft bill will be available in one to two weeks, Buschmann announces in another statement. There are other investigation methods available – such as Quick Freeze.
In the case of Quick Freeze, investigating authorities make an occasion-based request to the Internet or telecom operators, and they store the data from that point on. A judge is then called in. Only when the judge decides that the reason justifies the invasion of privacy does the provider send the stored data to the investigators.
But the coalition is far from unanimous. Federal Interior Minister Nancy Faeser (SPD) does not want to scrap data retention. She points out that the ECJ has clarified which data may be stored to protect national security and fight serious crime. It had also explicitly ruled that “IP addresses may be stored to fight serious crime.” It also allowed targeted storage orders for specific locations such as airports, train stations, or for areas with a high crime rate. These legal possibilities must also be used now, says Faeser.
She is convinced that these data is particularly helpful in combating sexualized violence against children. But Faeser would have to do a lot of convincing here: In the coalition agreement, the FDP and the Greens had prevailed – it states: After an ECJ ruling, “we will develop the regulations on data retention in such a way that data can be stored in a legally secure manner on an ad hoc basis and by judicial order.” As digital politicians, both SPD leaders were previously declared opponents of data retention – the current chancellor, on the other hand, is in favor of it.
The economy community disagrees with Faeser: “With its ruling today, the ECJ is effectively burying data retention. It makes no sense to continue to work on this instrument of storage of connection data without any reason,” says Bernhard Rohleder, Chief Executive Officer of the digital association Bitkom. “Politicians are called upon to use other options for digital forensics that comply with the law.”
This is also how Eco boss Süme sees it. “In order to make the fight against crime more efficient, the German government should discuss alternative approaches such as quick freeze or selective and occasion-based measures,” he says. “I also consider proper prioritization within the investigating authorities to be important: If time-critical cases are prioritized, data would not need to be stored for such a long period in the first place. Of course, this also requires law enforcement agencies to have the personnel who are appropriately trained and equipped.”
The data protection activists of the fundamental rights NGO Epicenter.works, who acted as plaintiffs in the 2014 ECJ case, welcome the ECJ decision. “We are pleased with today’s ruling and see our criticism of data retention confirmed once again,” said Thomas Lohninger of Epicenter.works. However, he said, an enormous deficit in the rule of law in Europe is becoming increasingly apparent. Although the ECJ has repeatedly overturned this mass surveillance of the population since 2014 as contrary to fundamental rights, many member states still “cling to these illegal surveillance laws.
“To date, the EU Commission has failed to initiate long overdue infringement proceedings against countries with data retention,” Lohninger criticized. “The EU Commission loses its credibility vis-à-vis Poland and Hungary if violations of EU primary law are accepted in cases where this seems politically opportune to France and Germany.” In a state governed by the rule of law, fundamental rights should apply to everyone and supreme court rulings should not be ignored for many years, the data protection expert believes.
MEP Patrick Breyer (Pirate Party) calls on the traffic light coalition to implement the coalition agreement and end any form of groundless data retention: “The mass and area-wide recording of the communications, movements and Internet use of completely blameless people is a totalitarian measure that is incompatible with the values of a free democracy,” says Breyer and criticizes, “The EU Court of Justice, under massive pressure from surveillance-hungry governments, has not objected to IP data retention on the Internet. However, it would place every Internet user under general suspicion and make the Internet usage of the entire population, which maps our most intimate preferences and weaknesses, traceable.”
IP addresses are like our digital fingerprints. Such total recording would endanger crime prevention through anonymous counseling and pastoral care, victim assistance through anonymous self-help forums, and also the free press, which depends on anonymous informants. Breyer calls on “the traffic light coalition to abolish any form of groundless data retention with a new law and to work for a Europe free of mass surveillance and general suspicion.”
Dennis-Kenji Kipker, Professor of IT security law at Bremen University of Applied Sciences, would have welcomed a clearer legal statement by the ECJ in favor of fundamental information rights. Now we have to work with the ruling. For the German government, this means that the debate about data retention is still on the table, and the issue will certainly continue to haunt politicians for years to come.
“The well-known exceptions, such as the protection of national security interests, the fight against (serious) crime, and the prevention of danger, still leave the member states a lot of room for maneuver,” says the lawyer. Shortly after the publication of the ruling in Germany, it was already clear that this room for maneuver will be used politically by at least making use of the quick freeze procedure. “This means that the well-known security actionism is far from gone, even under the traffic light coalition.”
According to Kipker, it would have made more sense to finally take the ruling as an opportunity to subject the overall national security architecture to a concrete reassessment and “to take a look in the junk room of many dusty state surveillance instruments to see what is still needed and what can definitely be done away with. This would not only save time but also money for the companies and would bring everyone a little more legal certainty. “This opportunity is now being squandered yet again.”
Kipker is not convinced that data retention – like video surveillance – will lead to a lower level of crime. “That may be so, but it doesn’t have to, because criminals also adjust to changed circumstances, choose other locations, commit crimes in other ways and by other means, or make themselves unrecognizable.”
However, the IT security lawyer also considers Quick Freeze a fig leaf. He says it is a lazy compromise that distracts from the actual legal discussion of whether such measures are necessary at all. “Of course, one can argue that Quick Freeze is less intrusive. But that shouldn’t be the question, because at least legally and in terms of the rule of law, it’s not about a political compromise at this point, but about whether we need a digital investigation measure and whether it can be effective at all.”
It’s one of Belgium’s best-known and most controversial landmarks: the highway network, which is well lit at night. Now the lights are switched off: The southern Belgian region of Wallonia is turning off 20,000 of 22,000 light fixtures to save electricity. The Grand Place in Brussels, which is popular with tourists, is now also dark at an earlier hour.
Belgium is thus following EU calls to drastically reduce gas and electricity consumption. At first glance, the kingdom in the west of Europe is not in such a bad position. Unlike Germany, it has its own liquefied gas terminals, wind energy is being expanded, and the operating lives of nuclear power plants are being extended.
Nevertheless, a bit of panic is spreading. There is no shortage of energy, but the price is giving the Belgians and their federal government a hard time. For an average household, the gas bill could skyrocket from €1072 a year to €7167, the newspaper La Libre calculates – seven times as much as before the crisis.
This is driving Belgians to the barricades. This Wednesday is the first national day of protest in Brussels, about dwindling purchasing power and energy price inflation. After a break of many years, on Sunday, the yellow vests want to make themselves heard again. And on November 9, there will also be a general strike.
The government does not know how to deal with the protest. Prime Minister Alexander De Croo had already called for an EU-wide price cap on gas in March, to no avail. Germany was against it, and for a while, this caused German-Belgian disgruntlement. But it does little good for the liberal politician to have warned in time.
Now he has to figure out how to control the situation – on the streets and in his colorful “Vivaldi” coalition. It has agreed on a relief package only after several crisis meetings. It provides for the extension of the social tariff for energy until March, the reduction of excise taxes on gasoline and diesel, and the reduction of the value-added tax on electricity and gas to 6 percent.
The government is also promising its citizens a monthly check for €135 for gas and €61 for electricity – but initially only in November and December. In addition, only those who have an (unfavorable) flexible tariff or a new contract will benefit from the energy check.
The €200 check is therefore already being criticized as inadequate – just a few days after the announcement by the government. It may help the country and its federal government through the “hot fall.” But what happens when the package expires in January? How will Belgians pay their heating bills then?
Belgium is driving on sight – and is reaching the limits of its possibilities. The national debt is over 100 percent of GDP – far from the 60 percent permitted under the Maastricht Treaty. Wallonia even reports 280 percent. It is unclear how long banks and rating agencies will continue to play along.
De Croo can thus no longer afford expensive new relief packages. He is dependent on help from the EU – either in the form of financial injections or a gas or electricity price cap that takes the pressure out of the kettle. “If the European Commission does not intervene, we risk ending up in a real war economy,” he demands.
So far, however, there are no signs of help from Brussels. The EU coffers are empty, and an energy price cap is not on the Energy Minister’s agenda. The Prime Minister’s back is against the wall. The only consolation is that he does not yet have to fear a challenger. The powerful regional politicians are also weakened by the crisis.
In her State of the Union speech, Commission President Ursula von der Leyen set other priorities. Digitalization was barely mentioned. Yet it is becoming increasingly important in all areas of life and is also a fundamental prerequisite for the Green Deal and the future viability of the European economy. The negotiation of the Chips Act is one of the most important projects scheduled for this fall in Europe, but there is more – as you already read in Part 1. This is the second part of our digital outlook.
Commission proposal: 09. February 2022
Actors: The lead committee is ITRE, the rapporteur is Dan Nica (S&D, Romania).
Content: Semiconductors are the engines of digital transformation. One trillion of them were manufactured in 2020, but only ten percent in Europe, which means that the production of many products in the EU depends on complex and recently highly vulnerable global supply chains. With the European Chip Act, the Commission aims to increase Europe’s competitiveness and resilience in terms of semiconductor technologies and applications. In parallel, Europe aims to strengthen its technological leadership in this area. The Chips Act itself is expected to generate additional public and private investment of more than €15 billion.
The Chip Act rests on three pillars:
Schedule: Draft report at an ITRE committee meeting in October. Deadline for amendments: December, Committee and Plenary votes: January and February 2023. The Council would still like to finalize its General Approach under the Czechs.
Commission proposal: announced for 26. October
Actors: EU Trade Commissioner Valdis Dombrovskis
Content: Unlike the US payment service provider Paypal, most money transfers in Europe do not reach their recipients until the next business day. Some take even longer. The Commission considers the period too long in the digital age. With an instant transfer, on the other hand, the money is in the recipient’s account within seconds – 365 days a year and around the clock. This provides many advantages for both consumers and businesses. For a customer to complete an instant transfer successfully, there must be a payment service provider on both sides of the transfer that adheres to the same rules, practices, and standards.
The European Payments Council developed such a scheme in 2017 for instant euro transfers within the Single Euro Payments Area (SEPA): the SCT Inst. Scheme.
The high participation of PSPs in this scheme is an important prerequisite for the widespread availability of instant euro transfers at the EU level. As of March 2021, only just under 64 percent of payment service providers in 21 member states had joined the SCT Inst. Scheme. With its initiative, the Commission aims to incentivize more service providers to offer innovative, convenient, secure, and cost-effective pan-European instant payment solutions.
Commission proposal: announced for 09. November
Actors: EU Competition Commissioner Margrethe Vestager and Josep Borrell, EU High Representative for Foreign Affairs and Security Policy
Synopsis: For years, the EU has been increasingly concerned about the rising number of cyberattacks by hackers or even state actors. The new commission document “will aim to drive the development of cyber defense capabilities, stimulate the EU’s industrial base, and further promote education, training and exercises,” an EU official explains.
Commission President Ursula von der Leyen has announced plans for a holistic European cyber defense policy as early as 2021, including legislation to set common standards under a new European law on cyber resilience. The original EU cyber defense policy framework had been adopted in 2014 and then updated in 2018. One of the most concrete developments was the creation of an EU legal framework for sanctioning cyber attackers in 2019, which was applied for the first time a year later.
Commission proposal: expected before the end of this year
Actors: EU Competition Commissioner Margrethe Vestager and EU Internal Market Commissioner Thierry Breton
Content: In July of this year, European cities sent a cry for help to Brussels. They called on the Commission to finally initiate regulation to combat illegal short-term rentals. The European Parliament had also called on the Commission to take legislative action on short-term rentals as early as January 2021.
Especially popular metropolises such as Amsterdam, Berlin, or London, where affordable housing is scarce and also cities where the coffers are empty, would like to see a uniform European legal framework. In this way, they want to combat illegal short-term rentals and, on the other hand, also be given instruments with which they can generate revenue from legal short-term rentals.
“The commission is currently working on the proposal to adopt it in the fall,” a commission official said. The proposal will “mainly focus on transparency issues in the sector,” he said.
Commission proposal: expected for 07. December 2022
Actors: EU Trade Commissioner Valdis Dombrovskis
Content: The EU wants to modernize the capital market to make it easier for start-ups, growth companies, and small and medium-sized businesses in particular to access the capital market. Until now, many companies in the EU have shied away from the stock market and missed out on the advantages that an IPO provides, such as a broader investor base, a higher profile, and stronger growth.
In other economies, SMEs use the capital market much more frequently for debt and equity financing. This is because IPOs for SMEs in the EU are relatively complex and cost-intensive. The aim of the Listing Act is now to create a simpler and more practical set of rules. Entry hurdles as well as the obligations resulting from the listing are to be simplified.
During the consultation, the EU addressed the following issues, among others:
Prospectuses: Simplification of prospectus drafting, prospectus review, and approval, a standard registration form.
Transparency: Simplification of the regulations on periodic publicity and the publicity of shareholdings
SPAC: Suitability of the current legal framework for SPACs (Special Purpose Acquisition Companies)
German politicians, who presented their startup strategy in the summer, are also looking to Europe. They want changes in capital market law so that startups have better opportunities to go public in Germany. Here, the revision of European requirements plays an important role. A study on the question: “How can IPOs be made easier for startups in Germany?”, which was commissioned by the previous government in 2021, criticizes above all the high hurdles to capital market access for startups.
Actors: White House, US Department of Commerce, EU Commission, European Parliament, EDPB
Content: For a year now, the EU Commission and the White House have been negotiating a new version of the recently failed Privacy Shield agreement. To this end, Biden’s administration is drafting presidential executive orders.
Following the ECJ’s Schrems II ruling, the pressure on US corporations to finally obtain a new, and this time perhaps legally secure, basis for transferring personal data from the EU to the US is immense. As soon as the decision of the responsible Irish data protection supervisory authority DPC in the Facebook case is published, the last once declared safe possibility is likely to disappear.
EU Justice Commissioner Didier Reynders expressed marked optimism in Washington a few days ago that the US side would soon spell out its steps. But before any adjustments in US executive law could affect possibly complying with ECJ requirements, the Commission would have to submit a new adequacy decision under Article 45 of the GDPR based on these US rule changes.
This must then be reviewed by Parliament and the Committee of European Data Protection Supervisors – which is not a short process. Nevertheless, time is pressing – and so is the US digital economy and US policy. After all, the data protection supervisory authorities have noticeably increased the number of fine proceedings in recent months.
Commission proposal from 11.05.2022
Actors: European Parliament, Council, Commission
Content: The proposal by Home Affairs Commissioner Ylva Johansson to impose an obligation on Internet companies to identify and pass on depictions of sexual abuse of children will be one of the major points of contention in the coming months. Resistance is increasing, especially in Germany, where the two FDP-led ministries BMDV and BMJ have already agreed on “red lines” that they do not want to see crossed under any circumstances. Interior Minister Nancy Faeser (SPD) had originally been very open to the Interior Commissioner’s plans. At the end of July, the European Data Protection Board and the European Data Protection Supervisor voiced massive criticism of the Commission’s proposal.
The regulation is assigned to the LIBE Committee in the European Parliament, a rapporteur has not yet been appointed.
Commission proposal from 10.01.2017
Actors: European Parliament, Council, Commission
Content: The e-privacy regulation is still stuck in the trilogue. Whether anything will ever move again is an open question; even the Czech Council presidency has not been able to cut the Gordian knot so far. The Commission is not expected to withdraw this dossier, which has been stuck in the process for over five years.
However, the German government hopes to be able to offer a solution to one problem complex: The ordinance to the TTDSG on Personal Information Management Systems (PIMS), which is to come into force next spring, could be a model for a European compromise – if the German solution proves to be such. But it has to pass through German institutions first.
Actor: Commission
Date: Presentation expected for 16.11.2022
Content: The EU Commission is expected to present a proposal for revising VAT law in mid-November. Among other things, this involves the possibility for online providers to get rid of a particularly onerous obligation more easily: If a trader is based in only one member state, he still has to deal with a maximum of 27 tax authorities in the respective member states. With the one-stop store procedure introduced in 2021, this should already be unnecessary – taxes for other member states are to be paid centrally, for example via the Federal Central Tax Office in Germany.
However, the Commission sees a need for improvement here. In particular, the adaptation of the mandatory disclosures (DRR) was the subject of a consultation: Here, an independent standard for EU sales could be introduced. In addition, electronic invoices could be made mandatory in the B2B area via this detour. However, the question of taxability and applicable tax rates for services offered via online platforms remains complicated. Here, further harmonization could come with the proposal.
Actor: European Parliament, PEGA Committee
Content: The Special Committee to Investigate the Use and Abuse of Spyware, established in the wake of the alleged misuse of Israeli vendor NSO’s Pegasus spyware, including by EU states, has a busy schedule. Most recently, fact-finding missions have taken place to Greece, where authorities are alleged to have used the Predator software, and Poland, which had contracted with NSO through Pegasus, as well as Israel.
In the coming months, the committee will have to deal with more of the desired consequences of its findings: For example, whether the Dual-Use Regulation needs to be adapted again. The EU Commission has already included another element from the PEGA mission in its proposal for a Media Freedom Act: a strict ban on the use of spyware against journalists and media companies without a court order.
Actors: Commission, Parliament
Content: Based on the 2020 Circular Economy Action Plan, the Commission is launching a series of new requirements for electronic devices.
A public consultation on initial drafts of regulation on ecodesign and energy labeling requirements for cell phones and tablets will run until Sept. 28. According to the proposals, manufacturers should make devices robust, repairable, and reusable. Spare parts, for example, should be available more quickly and easier to replace. The specifications also relate to the operating system: the devices must have a function that resets them to the factory settings, for example. Information on repair and maintenance should be more accessible and also include instructions for software and firmware.
A new product label is to make information on the energy efficiency, repairability, and robustness of appliances transparent for consumers. According to commission circles, the adoption of the legal acts is scheduled for late 2022 or early 2023. The requirements would apply 12 to 18 months after the acts enter into force.
Meanwhile, the Environment Committee in Parliament is negotiating the amendment to the Ecodesign Directive, which the Commission presented six months ago as part of the first package of measures on the circular economy. The directive is to be converted into a regulation, which would then have a greater impact on the member states. Based on the amendment, almost all product groups are to have to meet extensive sustainability criteria – for example, certain recycling percentages of materials or reparability. A digital product passport is also part of the proposal. The rapporteur is Simona Bonafè (S&D).
As part of the second Circular Economy Package, Věra Jourová, Commissioner for Values and Transparency, will also present another legislative proposal on November 30 to strengthen the “right to repair” for female consumers.
Leonie Düngefeld, Ella Joyner, Falk Steiner and Corinna Visser
According to the Advocate General of the European Court of Justice (ECJ), antitrust authorities may also examine compliance with data protection regulations in their competition investigations. Advocate General Athanasios Rantos came to this assessment on Tuesday in the dispute between the German Federal Cartel Office and Facebook parent Meta. In general, the ECJ follows the Advocate General’s reasoning.
Facebook parent company Meta had criticized the actions of the German Federal Cartel Office, which intends to put a stop to the comprehensive collection of Facebook users’ data. The authority was exceeding its powers and disregarding the jurisdiction of the Irish data protection authority, the group argued. But Advocate General Rantos said Tuesday, that a competition authority can examine the compatibility of business practice with the European General Data Protection Regulation when exercising its powers. However, competition authorities would have to take into account any decision or investigation by the relevant data protection authority.
At the hearing prior to the ECJ in May, the Federal Cartel Office rejected Meta’s accusation that it had not cooperated with the Irish data protection authority, which is responsible for Facebook because of its headquarters in Ireland. The representative of the Bonn-based authority explained at the time that there had indeed been contacts with the Irish authority.
The Cartel Office ruled in 2019 that Facebook had abused its market power by collecting certain data from users without their explicit consent. This involved personal data that users enter on WhatsApp or Instagram and other services.
The antitrust office had also prohibited Facebook from combining user data from different sources with reference to data protection. The US company is taking legal action against this. The Düsseldorf Higher Regional Court, which was ultimately responsible, referred the case to the ECJ for clarification of key issues by the European court. rtr
After the Commission presented a proposal to reform the electricity market to reduce electricity and gas prices last week, the Czech Council Presidency handed in the first compromise proposals. Although the draft states that the electricity price cap should be €180 per MWh, member states have the option to introduce a higher cap if generation costs exceed €180. But in this case, countries should still set their own cap. However, this should not cause more carbon emissions.
The price cap would also apply to electricity from lignite, but not from hard coal. Member states could, however, define national measures to limit the revenues from hard-coal-fired generation. Provided they do not interfere with the merit-order principle and price formation on the wholesale market.
As proposed by the Commission, the reduction in peak electricity demand would be 5 percent. But under the presidency’s proposal, peak demand would not be calculated monthly, but based on the highest consumption in at least 10 percent of hours between Dec. 1, 2022, and March 31, 2023.
The levy of 33 percent of the surplus profits of the fossil industry should continue to be implemented in favor of a temporary solidarity contribution. However, member states are to be able to waive the levy if they can demonstrate “equivalent national measures” that have already been implemented. Member states should also be able to use surplus revenues from congestion income to finance measures to support electricity end customers. luk
The German government has initiated a debate on the expansion of majority voting in Brussels. The so-called Qualified Majority Voting (QMV) should also be introduced in foreign policy and sanctions decisions, said Anna Lührmann, Minister of State for Europe, on the sidelines of the General Council in Brussels. She added that discussions with like-minded countries were underway.
The Czech presidency supports the German initiative. A majority of the EU states are willing to discuss QMV, said Czech Minister for European Affairs Mikuláš Bek after the Council meeting. However, for the 27 to abandon the unanimity principle, there is a need to build trust. For example, through an impact assessment. In addition, it would be necessary to proceed “step by step.”
As expected, opposition came from Hungary, but also Ireland and Austria. In sanctions policy, “the true strength of the EU (…) is that we also take decisions unanimously,” said Austria’s EU Minister Karoline Edtstadler. “Citizens will not thank us if we allow ourselves to be distracted by procedural issues,” warned Irish Europe Minister Thomas Byrne. Poland has also already expressed its skepticism (Europe.Table reported).
Lührmann promised to address the skeptic’s concerns. The Green politician said she was “optimistic that progress is possible.” For this purpose, Berlin wants to use the so-called passerelle clause in the EU treaty, which allows the heads of state and government to decide when to switch to majority voting in certain areas.
However, this again requires unanimity. Hungary could therefore block the reform with a veto. In his speech on Europe in Prague at the end of August, German Chancellor Olaf Scholz called for a gradual transition to majority voting, which is also necessary for the admission of new members such as Ukraine, according to Berlin. ebo
The Hungarian government has submitted a first law to parliament to avert a threatened cut in EU funding. It provides for an incompatibility rule for members of boards of trustees of public foundations and improved administrative assistance for the EU’s Anti Fraud Office OLAF. The law appeared on the Hungarian parliament’s website on Monday evening. The government of Prime Minister Viktor Orbán plans to introduce another legislative package on Friday.
A particularly sensitive case is the public foundations to which the Orbán government has given most of the country’s universities. Their boards of trustees are composed almost exclusively of Orbán-loyal figures, including ministers and state secretaries. These individuals could not be replaced, even after a change of government.
The draft law now stipulates that board members of trustees may not participate in foundation decisions in which conflicts of interest would arise for them. Politicians, however, would not have to leave the boards of trustees in the future, Hungarian EU chief negotiator Tibor Navracsics hastened to explain on TV channel ATV on Tuesday. “The EU Commission does not expect that,” he said. Navracsics himself chairs a foundation that manages the Pannonian University in the western Hungarian city of Veszprém.
In addition, the law stipulates that the Hungarian tax authority NAV will provide administrative assistance to the investigators of the EU agency OLAF. Among other things, NAV is to make office premises available to OLAF colleagues during investigations in Hungary and give them access to the tax office’s databases and documents. dpa
Irishman Tony Murphy will be the new President of the European Court of Auditors (ECA). Murphy, born in 1962, achieved the required majority in the 27-member body in the second round of voting. Murphy takes office on October 1. He is the twelfth president of the supervisory body for all revenues and expenditures of the EU institutions and succeeds Klaus-Heiner Lehne, who did not run again after two terms. A term of office lasts three years.
Each EU member state sends one representative to the ECJ. The President of the ECA holds office as primus inter pares. Murphy has a long career as an accountant and auditor. He started as an auditor at the Irish Court of Audit in 1979 and moved to the Commission as a seconded national expert in 1999. An EU official since 2003, he moved to the ECA in 2013, initially heading a member’s cabinet. mgr
A successor to Klaus Regling at the ESM must be found by October 7. The Managing Director of the European Stability Mechanism, who has also headed the European Finacial Stability Facility (EFSF) since 2010, will retire on that day. The search for a successor has been entrusted to Paschal Donohoe, Finance Minister of Ireland and Head of the Eurogroup.
Donohoe tweeted yesterday that the two previous candidates to succeed Regling are no longer available. He said his colleagues, the finance ministers of Luxembourg and Portugal, had informed him that the respective candidates from the two countries were withdrawing their candidacies. Pierre Gramegna of Luxembourg and João Leão of Portugal were competing for the post. There was a stalemate in the Eurogroup. Gramegna was supported by a group of member states from northern Europe, Leão by southern member states.
Donohe praised both as “excellent candidates” and thanked them for their willingness to accept the post. He said he would continue his efforts to find a Regling successor. Observers believe the coordinated withdrawal of the two competing candidates is intended to clear the way for a compromise candidate. mgr
With the help of the EU Commission, a total of 14 million tons of agricultural products have been exported from Ukraine so far. Through so-called solidarity lanes and the Black Sea ports, mainly grain and oilseeds have been delivered from Ukraine to the EU since the start of the Russian war of aggression, an EU official said Tuesday. Sixty-one percent of the goods were reportedly transported via the specially established corridors, while the remaining 39 percent were shipped via the Black Sea.
According to the Commission, under normal circumstances, 90 percent of Ukraine’s grain and oilseed exports – which include sunflower and rapeseed – are shipped through the country’s Black Sea ports. In May, 20 million tons of grain were still stuck in Ukraine, threatening to block storage facilities needed for the next harvests, according to the EU Commission.
As the EU official further explained, the goods have been transported mainly by land via Poland and parts of southeastern Europe. This way, humanitarian aid, for example, could be brought to Ukraine. Soon, transport routes via Central Europe, for example to France, Spain or Italy, will be opened up.
One hurdle in transporting the goods is that Ukrainian train cars are not compatible with most of the EU rail network, the EU official explained. A study will now be conducted to show how many routes are affected by the problem so that subsequent adjustments can be made. Until now, most goods had to be reloaded onto trucks or other wagons. dpa
At a time when turbulence in Europe’s energy market is making daily headlines, Jan Rosenow remains optimistic: “On the whole, I think we’re well on the way to achieving our climate targets,” he says in response to the question of what the energy system will look like in ten years.
The 42-year-old is Head of European Programs at the Regulatory Assistance Project (RAP). RAP is a “think-and-do-tank,” as Rosenow likes to call it. The organization works hand-in-hand with decision-makers in several regions around the world to push the energy revolution. “Our focus is decarbonization and that we are creating a clean energy system through smart policy, regulation, and market design,” he says.
Rosenow grew up in a village near Bielefeld. His father was an active member of the Green Party. As early as the third school year, he encouraged his classmates to take part in aid campaigns, he says. “We collected waste or built birdhouses that we sold at the weekly market, then donated the proceeds to rainforest conservation organizations, for example.”
After studying geosciences in Münster, Rosenow completed a master’s degree in environmental policy at the London School of Economics, which was followed by a Ph.D. in Energy Policy at Oxford. His expertise in energy market issues is in high demand. The European Commission, the European Parliament, the International Energy Agency, USAID, and the British Parliament are just some of the institutions that called on him as a consultant.
In his current assignment at the RAP, Rosenow supports the EU in its ambitious goal of being climate neutral by 2050. In doing so, he observes that some sectors make more progress than others. “The energy sector, by and large, is on a good path, and we understand how to scale these technologies,” he says.
He sees a lot of pent-up demand in transportation, construction and heating, as well as in industry. Europe must invest massively in technologies and pursue strategic policies to increase its energy efficiency, he says – that means heat pumps, eVs, energy refurbishments, and other measures that “reduce energy waste and inefficiency in the system”.
In his view, the current energy crisis created by the Russian invasion of Ukraine will “massively accelerate” the energy transition. It will be necessary to accept that coal-fired power plants will have to be ramped up again in the short term and that some construction on the gas infrastructure will be needed, Rosenow said. “The more important step I see is a massive investment in green technologies.” He believes, that the current high energy prices would provide a powerful boost in that regard. Michael Grubb
It’s no surprise since the ruling is in line with previous case law: Yesterday, the ECJ confirmed that EU law precludes general and indiscriminate data retention of its citizens. Federal Justice Minister Marco Buschmann (FDP) reacted enthusiastically to the ruling – and referred to Quick Freeze as an alternative. However, the issue is far from being closed. Data protectionists see a need for discussion – as do some of Buschmann’s coalition partners. Corinna Visser has compiled the many reactions to the ruling – and talked to an expert in IT security law who laments a missed opportunity.
On the famous Grand Place in Brussels, the lights turn off earlier these days- and the energy crisis is also noticeable on the Belgian highway network, which was well lit at night at regular times. Yet Belgium is not in a bad position regarding energy supply. However, the massive rise in energy prices is causing unrest. The country is facing severe protests, and the yellow vests are planning their comeback. “If the European Commission does not intervene, we risk ending up in a real war economy,” says Prime Minister Alexander De Croo. But help from Brussels is not in sight so far, as Eric Bonse reports.
In her State of the Union speech, Ursula von der Leyen addressed a range of topics – but hardly any of them dealt with digitization. Yet there are several important digital projects lined up for the coming period. After an initial overview of the upcoming digital policy projects at the beginning of the month, we present the second part today. On this fall’s agenda are, for example, the negotiations on the Chips Act and the Commission’s proposal for a cyber defense policy. The Commission is currently waiting for the US to take steps on the Transatlantic Data Privacy Framework (TADPF), the new version of the failed Privacy Shield agreement. One of the major points of contention is likely to be the proposal for the CSAM regulation, which would impose an obligation on Internet companies to identify and pass on depictions of sexual abuse of children. There is increasing resistance, especially in Germany.
Unsurprisingly, the European Court of Justice (ECJ) confirmed in its ruling on Tuesday that EU law precludes the general and indiscriminate retention of traffic and location data of its citizens. The ECJ is thus adhering to its previous case law.
The ECJ grants exceptions, for example, if there is a serious threat to national security. In order to combat serious crime, the member states can therefore provide for targeted retention and/or immediate backup of such data, as well as general and indiscriminate storage of IP addresses, while strictly observing the principle of proportionality. This is viewed critically by the Pirate Party in particular, which doubts that all the data retention (VdS) has a measurable impact in the investigation of serious crimes (see study).
The proceedings before the ECJ were brought about by the Munich-based Internet provider SpaceNet, which had filed a lawsuit with the Cologne Administrative Court in 2016 with the support of the Eco Association of the Internet Industry. “After six years of proceedings, we are glad that the issue of data retention has finally been clarified,” commented Sebastian von Bomhard, founder and CEO of SpaceNet, on the ECJ ruling. “Now there is legal certainty again for the Internet industry, our customers, and all citizens.” But in fact, the discussion is not over.
Data retention (VdS) has been controversial since the Bundesrat first called for minimum periods for storing data to fight crime in 1996.
The German law contained significantly reduced obligations for providers: The to-be-stored data was metadata on communication processes. This includes, for example, the time and duration of a telephone call, who made the call or sent an SMS to whom, and the IP address of a device on the Internet. The content of the communication, i.e. the conversation or the message itself or which Internet page was called up, is not stored.
Also not included were so-called over-the-top services such as WhatsApp or Signal, which work on an Internet protocol basis. After a certain period – in the current case between four and ten weeks, depending on the data – the data must be deleted. Before that, competent authorities can demand that the data be handed over for investigative purposes through a court order.
Eco CEO Oliver Süme is relieved that the “ruling was in favor of our fundamental rights.” “Data retention massively encroaches on the privacy of almost all German users and does not even provide any proven added value for law enforcement. On top of that, it is estimated to cost the industry more than €600 million.”
Süme believes that the ruling gives the German government the opportunity to set a political course. “It would be desirable if politicians also seized this opportunity and thus finally created clarity about the obligation to retain data,” he says. “The German government should therefore promptly initiate the repeal of data retention. This would also strengthen civil rights in digital communications and give companies the legal and planning certainty they urgently need.”
Deutsche Telekom argues similarly: “For us, legal certainty in the implementation of data retention is crucial,” Telekom says in response to a query. The ECJ ruling will create greater legal certainty. “It is now up to the legislator to implement these requirements.”
The German government had anticipated the renewed defeat at the ECJ. In the coalition agreement, the governing parties wrote at the end of 2021 that the coalition would develop the regulations on data retention in such a way “that data can be stored in a legally secure manner on an ad hoc basis and by judicial order”.
Nevertheless, not all coalition members are unanimous in their assessment: In a first reaction on Twitter, Federal Minister of Justice Marco Buschmann (FDP) comments: “A good day for civil rights! The ECJ has confirmed in a historic ruling: Data retention in Germany without an obligation is unlawful. We will now swiftly and definitively remove no-solicitation data retention from the law.”
Buschmann is referring to the Telecommunications Act (TKG). A draft bill will be available in one to two weeks, Buschmann announces in another statement. There are other investigation methods available – such as Quick Freeze.
In the case of Quick Freeze, investigating authorities make an occasion-based request to the Internet or telecom operators, and they store the data from that point on. A judge is then called in. Only when the judge decides that the reason justifies the invasion of privacy does the provider send the stored data to the investigators.
But the coalition is far from unanimous. Federal Interior Minister Nancy Faeser (SPD) does not want to scrap data retention. She points out that the ECJ has clarified which data may be stored to protect national security and fight serious crime. It had also explicitly ruled that “IP addresses may be stored to fight serious crime.” It also allowed targeted storage orders for specific locations such as airports, train stations, or for areas with a high crime rate. These legal possibilities must also be used now, says Faeser.
She is convinced that these data is particularly helpful in combating sexualized violence against children. But Faeser would have to do a lot of convincing here: In the coalition agreement, the FDP and the Greens had prevailed – it states: After an ECJ ruling, “we will develop the regulations on data retention in such a way that data can be stored in a legally secure manner on an ad hoc basis and by judicial order.” As digital politicians, both SPD leaders were previously declared opponents of data retention – the current chancellor, on the other hand, is in favor of it.
The economy community disagrees with Faeser: “With its ruling today, the ECJ is effectively burying data retention. It makes no sense to continue to work on this instrument of storage of connection data without any reason,” says Bernhard Rohleder, Chief Executive Officer of the digital association Bitkom. “Politicians are called upon to use other options for digital forensics that comply with the law.”
This is also how Eco boss Süme sees it. “In order to make the fight against crime more efficient, the German government should discuss alternative approaches such as quick freeze or selective and occasion-based measures,” he says. “I also consider proper prioritization within the investigating authorities to be important: If time-critical cases are prioritized, data would not need to be stored for such a long period in the first place. Of course, this also requires law enforcement agencies to have the personnel who are appropriately trained and equipped.”
The data protection activists of the fundamental rights NGO Epicenter.works, who acted as plaintiffs in the 2014 ECJ case, welcome the ECJ decision. “We are pleased with today’s ruling and see our criticism of data retention confirmed once again,” said Thomas Lohninger of Epicenter.works. However, he said, an enormous deficit in the rule of law in Europe is becoming increasingly apparent. Although the ECJ has repeatedly overturned this mass surveillance of the population since 2014 as contrary to fundamental rights, many member states still “cling to these illegal surveillance laws.
“To date, the EU Commission has failed to initiate long overdue infringement proceedings against countries with data retention,” Lohninger criticized. “The EU Commission loses its credibility vis-à-vis Poland and Hungary if violations of EU primary law are accepted in cases where this seems politically opportune to France and Germany.” In a state governed by the rule of law, fundamental rights should apply to everyone and supreme court rulings should not be ignored for many years, the data protection expert believes.
MEP Patrick Breyer (Pirate Party) calls on the traffic light coalition to implement the coalition agreement and end any form of groundless data retention: “The mass and area-wide recording of the communications, movements and Internet use of completely blameless people is a totalitarian measure that is incompatible with the values of a free democracy,” says Breyer and criticizes, “The EU Court of Justice, under massive pressure from surveillance-hungry governments, has not objected to IP data retention on the Internet. However, it would place every Internet user under general suspicion and make the Internet usage of the entire population, which maps our most intimate preferences and weaknesses, traceable.”
IP addresses are like our digital fingerprints. Such total recording would endanger crime prevention through anonymous counseling and pastoral care, victim assistance through anonymous self-help forums, and also the free press, which depends on anonymous informants. Breyer calls on “the traffic light coalition to abolish any form of groundless data retention with a new law and to work for a Europe free of mass surveillance and general suspicion.”
Dennis-Kenji Kipker, Professor of IT security law at Bremen University of Applied Sciences, would have welcomed a clearer legal statement by the ECJ in favor of fundamental information rights. Now we have to work with the ruling. For the German government, this means that the debate about data retention is still on the table, and the issue will certainly continue to haunt politicians for years to come.
“The well-known exceptions, such as the protection of national security interests, the fight against (serious) crime, and the prevention of danger, still leave the member states a lot of room for maneuver,” says the lawyer. Shortly after the publication of the ruling in Germany, it was already clear that this room for maneuver will be used politically by at least making use of the quick freeze procedure. “This means that the well-known security actionism is far from gone, even under the traffic light coalition.”
According to Kipker, it would have made more sense to finally take the ruling as an opportunity to subject the overall national security architecture to a concrete reassessment and “to take a look in the junk room of many dusty state surveillance instruments to see what is still needed and what can definitely be done away with. This would not only save time but also money for the companies and would bring everyone a little more legal certainty. “This opportunity is now being squandered yet again.”
Kipker is not convinced that data retention – like video surveillance – will lead to a lower level of crime. “That may be so, but it doesn’t have to, because criminals also adjust to changed circumstances, choose other locations, commit crimes in other ways and by other means, or make themselves unrecognizable.”
However, the IT security lawyer also considers Quick Freeze a fig leaf. He says it is a lazy compromise that distracts from the actual legal discussion of whether such measures are necessary at all. “Of course, one can argue that Quick Freeze is less intrusive. But that shouldn’t be the question, because at least legally and in terms of the rule of law, it’s not about a political compromise at this point, but about whether we need a digital investigation measure and whether it can be effective at all.”
It’s one of Belgium’s best-known and most controversial landmarks: the highway network, which is well lit at night. Now the lights are switched off: The southern Belgian region of Wallonia is turning off 20,000 of 22,000 light fixtures to save electricity. The Grand Place in Brussels, which is popular with tourists, is now also dark at an earlier hour.
Belgium is thus following EU calls to drastically reduce gas and electricity consumption. At first glance, the kingdom in the west of Europe is not in such a bad position. Unlike Germany, it has its own liquefied gas terminals, wind energy is being expanded, and the operating lives of nuclear power plants are being extended.
Nevertheless, a bit of panic is spreading. There is no shortage of energy, but the price is giving the Belgians and their federal government a hard time. For an average household, the gas bill could skyrocket from €1072 a year to €7167, the newspaper La Libre calculates – seven times as much as before the crisis.
This is driving Belgians to the barricades. This Wednesday is the first national day of protest in Brussels, about dwindling purchasing power and energy price inflation. After a break of many years, on Sunday, the yellow vests want to make themselves heard again. And on November 9, there will also be a general strike.
The government does not know how to deal with the protest. Prime Minister Alexander De Croo had already called for an EU-wide price cap on gas in March, to no avail. Germany was against it, and for a while, this caused German-Belgian disgruntlement. But it does little good for the liberal politician to have warned in time.
Now he has to figure out how to control the situation – on the streets and in his colorful “Vivaldi” coalition. It has agreed on a relief package only after several crisis meetings. It provides for the extension of the social tariff for energy until March, the reduction of excise taxes on gasoline and diesel, and the reduction of the value-added tax on electricity and gas to 6 percent.
The government is also promising its citizens a monthly check for €135 for gas and €61 for electricity – but initially only in November and December. In addition, only those who have an (unfavorable) flexible tariff or a new contract will benefit from the energy check.
The €200 check is therefore already being criticized as inadequate – just a few days after the announcement by the government. It may help the country and its federal government through the “hot fall.” But what happens when the package expires in January? How will Belgians pay their heating bills then?
Belgium is driving on sight – and is reaching the limits of its possibilities. The national debt is over 100 percent of GDP – far from the 60 percent permitted under the Maastricht Treaty. Wallonia even reports 280 percent. It is unclear how long banks and rating agencies will continue to play along.
De Croo can thus no longer afford expensive new relief packages. He is dependent on help from the EU – either in the form of financial injections or a gas or electricity price cap that takes the pressure out of the kettle. “If the European Commission does not intervene, we risk ending up in a real war economy,” he demands.
So far, however, there are no signs of help from Brussels. The EU coffers are empty, and an energy price cap is not on the Energy Minister’s agenda. The Prime Minister’s back is against the wall. The only consolation is that he does not yet have to fear a challenger. The powerful regional politicians are also weakened by the crisis.
In her State of the Union speech, Commission President Ursula von der Leyen set other priorities. Digitalization was barely mentioned. Yet it is becoming increasingly important in all areas of life and is also a fundamental prerequisite for the Green Deal and the future viability of the European economy. The negotiation of the Chips Act is one of the most important projects scheduled for this fall in Europe, but there is more – as you already read in Part 1. This is the second part of our digital outlook.
Commission proposal: 09. February 2022
Actors: The lead committee is ITRE, the rapporteur is Dan Nica (S&D, Romania).
Content: Semiconductors are the engines of digital transformation. One trillion of them were manufactured in 2020, but only ten percent in Europe, which means that the production of many products in the EU depends on complex and recently highly vulnerable global supply chains. With the European Chip Act, the Commission aims to increase Europe’s competitiveness and resilience in terms of semiconductor technologies and applications. In parallel, Europe aims to strengthen its technological leadership in this area. The Chips Act itself is expected to generate additional public and private investment of more than €15 billion.
The Chip Act rests on three pillars:
Schedule: Draft report at an ITRE committee meeting in October. Deadline for amendments: December, Committee and Plenary votes: January and February 2023. The Council would still like to finalize its General Approach under the Czechs.
Commission proposal: announced for 26. October
Actors: EU Trade Commissioner Valdis Dombrovskis
Content: Unlike the US payment service provider Paypal, most money transfers in Europe do not reach their recipients until the next business day. Some take even longer. The Commission considers the period too long in the digital age. With an instant transfer, on the other hand, the money is in the recipient’s account within seconds – 365 days a year and around the clock. This provides many advantages for both consumers and businesses. For a customer to complete an instant transfer successfully, there must be a payment service provider on both sides of the transfer that adheres to the same rules, practices, and standards.
The European Payments Council developed such a scheme in 2017 for instant euro transfers within the Single Euro Payments Area (SEPA): the SCT Inst. Scheme.
The high participation of PSPs in this scheme is an important prerequisite for the widespread availability of instant euro transfers at the EU level. As of March 2021, only just under 64 percent of payment service providers in 21 member states had joined the SCT Inst. Scheme. With its initiative, the Commission aims to incentivize more service providers to offer innovative, convenient, secure, and cost-effective pan-European instant payment solutions.
Commission proposal: announced for 09. November
Actors: EU Competition Commissioner Margrethe Vestager and Josep Borrell, EU High Representative for Foreign Affairs and Security Policy
Synopsis: For years, the EU has been increasingly concerned about the rising number of cyberattacks by hackers or even state actors. The new commission document “will aim to drive the development of cyber defense capabilities, stimulate the EU’s industrial base, and further promote education, training and exercises,” an EU official explains.
Commission President Ursula von der Leyen has announced plans for a holistic European cyber defense policy as early as 2021, including legislation to set common standards under a new European law on cyber resilience. The original EU cyber defense policy framework had been adopted in 2014 and then updated in 2018. One of the most concrete developments was the creation of an EU legal framework for sanctioning cyber attackers in 2019, which was applied for the first time a year later.
Commission proposal: expected before the end of this year
Actors: EU Competition Commissioner Margrethe Vestager and EU Internal Market Commissioner Thierry Breton
Content: In July of this year, European cities sent a cry for help to Brussels. They called on the Commission to finally initiate regulation to combat illegal short-term rentals. The European Parliament had also called on the Commission to take legislative action on short-term rentals as early as January 2021.
Especially popular metropolises such as Amsterdam, Berlin, or London, where affordable housing is scarce and also cities where the coffers are empty, would like to see a uniform European legal framework. In this way, they want to combat illegal short-term rentals and, on the other hand, also be given instruments with which they can generate revenue from legal short-term rentals.
“The commission is currently working on the proposal to adopt it in the fall,” a commission official said. The proposal will “mainly focus on transparency issues in the sector,” he said.
Commission proposal: expected for 07. December 2022
Actors: EU Trade Commissioner Valdis Dombrovskis
Content: The EU wants to modernize the capital market to make it easier for start-ups, growth companies, and small and medium-sized businesses in particular to access the capital market. Until now, many companies in the EU have shied away from the stock market and missed out on the advantages that an IPO provides, such as a broader investor base, a higher profile, and stronger growth.
In other economies, SMEs use the capital market much more frequently for debt and equity financing. This is because IPOs for SMEs in the EU are relatively complex and cost-intensive. The aim of the Listing Act is now to create a simpler and more practical set of rules. Entry hurdles as well as the obligations resulting from the listing are to be simplified.
During the consultation, the EU addressed the following issues, among others:
Prospectuses: Simplification of prospectus drafting, prospectus review, and approval, a standard registration form.
Transparency: Simplification of the regulations on periodic publicity and the publicity of shareholdings
SPAC: Suitability of the current legal framework for SPACs (Special Purpose Acquisition Companies)
German politicians, who presented their startup strategy in the summer, are also looking to Europe. They want changes in capital market law so that startups have better opportunities to go public in Germany. Here, the revision of European requirements plays an important role. A study on the question: “How can IPOs be made easier for startups in Germany?”, which was commissioned by the previous government in 2021, criticizes above all the high hurdles to capital market access for startups.
Actors: White House, US Department of Commerce, EU Commission, European Parliament, EDPB
Content: For a year now, the EU Commission and the White House have been negotiating a new version of the recently failed Privacy Shield agreement. To this end, Biden’s administration is drafting presidential executive orders.
Following the ECJ’s Schrems II ruling, the pressure on US corporations to finally obtain a new, and this time perhaps legally secure, basis for transferring personal data from the EU to the US is immense. As soon as the decision of the responsible Irish data protection supervisory authority DPC in the Facebook case is published, the last once declared safe possibility is likely to disappear.
EU Justice Commissioner Didier Reynders expressed marked optimism in Washington a few days ago that the US side would soon spell out its steps. But before any adjustments in US executive law could affect possibly complying with ECJ requirements, the Commission would have to submit a new adequacy decision under Article 45 of the GDPR based on these US rule changes.
This must then be reviewed by Parliament and the Committee of European Data Protection Supervisors – which is not a short process. Nevertheless, time is pressing – and so is the US digital economy and US policy. After all, the data protection supervisory authorities have noticeably increased the number of fine proceedings in recent months.
Commission proposal from 11.05.2022
Actors: European Parliament, Council, Commission
Content: The proposal by Home Affairs Commissioner Ylva Johansson to impose an obligation on Internet companies to identify and pass on depictions of sexual abuse of children will be one of the major points of contention in the coming months. Resistance is increasing, especially in Germany, where the two FDP-led ministries BMDV and BMJ have already agreed on “red lines” that they do not want to see crossed under any circumstances. Interior Minister Nancy Faeser (SPD) had originally been very open to the Interior Commissioner’s plans. At the end of July, the European Data Protection Board and the European Data Protection Supervisor voiced massive criticism of the Commission’s proposal.
The regulation is assigned to the LIBE Committee in the European Parliament, a rapporteur has not yet been appointed.
Commission proposal from 10.01.2017
Actors: European Parliament, Council, Commission
Content: The e-privacy regulation is still stuck in the trilogue. Whether anything will ever move again is an open question; even the Czech Council presidency has not been able to cut the Gordian knot so far. The Commission is not expected to withdraw this dossier, which has been stuck in the process for over five years.
However, the German government hopes to be able to offer a solution to one problem complex: The ordinance to the TTDSG on Personal Information Management Systems (PIMS), which is to come into force next spring, could be a model for a European compromise – if the German solution proves to be such. But it has to pass through German institutions first.
Actor: Commission
Date: Presentation expected for 16.11.2022
Content: The EU Commission is expected to present a proposal for revising VAT law in mid-November. Among other things, this involves the possibility for online providers to get rid of a particularly onerous obligation more easily: If a trader is based in only one member state, he still has to deal with a maximum of 27 tax authorities in the respective member states. With the one-stop store procedure introduced in 2021, this should already be unnecessary – taxes for other member states are to be paid centrally, for example via the Federal Central Tax Office in Germany.
However, the Commission sees a need for improvement here. In particular, the adaptation of the mandatory disclosures (DRR) was the subject of a consultation: Here, an independent standard for EU sales could be introduced. In addition, electronic invoices could be made mandatory in the B2B area via this detour. However, the question of taxability and applicable tax rates for services offered via online platforms remains complicated. Here, further harmonization could come with the proposal.
Actor: European Parliament, PEGA Committee
Content: The Special Committee to Investigate the Use and Abuse of Spyware, established in the wake of the alleged misuse of Israeli vendor NSO’s Pegasus spyware, including by EU states, has a busy schedule. Most recently, fact-finding missions have taken place to Greece, where authorities are alleged to have used the Predator software, and Poland, which had contracted with NSO through Pegasus, as well as Israel.
In the coming months, the committee will have to deal with more of the desired consequences of its findings: For example, whether the Dual-Use Regulation needs to be adapted again. The EU Commission has already included another element from the PEGA mission in its proposal for a Media Freedom Act: a strict ban on the use of spyware against journalists and media companies without a court order.
Actors: Commission, Parliament
Content: Based on the 2020 Circular Economy Action Plan, the Commission is launching a series of new requirements for electronic devices.
A public consultation on initial drafts of regulation on ecodesign and energy labeling requirements for cell phones and tablets will run until Sept. 28. According to the proposals, manufacturers should make devices robust, repairable, and reusable. Spare parts, for example, should be available more quickly and easier to replace. The specifications also relate to the operating system: the devices must have a function that resets them to the factory settings, for example. Information on repair and maintenance should be more accessible and also include instructions for software and firmware.
A new product label is to make information on the energy efficiency, repairability, and robustness of appliances transparent for consumers. According to commission circles, the adoption of the legal acts is scheduled for late 2022 or early 2023. The requirements would apply 12 to 18 months after the acts enter into force.
Meanwhile, the Environment Committee in Parliament is negotiating the amendment to the Ecodesign Directive, which the Commission presented six months ago as part of the first package of measures on the circular economy. The directive is to be converted into a regulation, which would then have a greater impact on the member states. Based on the amendment, almost all product groups are to have to meet extensive sustainability criteria – for example, certain recycling percentages of materials or reparability. A digital product passport is also part of the proposal. The rapporteur is Simona Bonafè (S&D).
As part of the second Circular Economy Package, Věra Jourová, Commissioner for Values and Transparency, will also present another legislative proposal on November 30 to strengthen the “right to repair” for female consumers.
Leonie Düngefeld, Ella Joyner, Falk Steiner and Corinna Visser
According to the Advocate General of the European Court of Justice (ECJ), antitrust authorities may also examine compliance with data protection regulations in their competition investigations. Advocate General Athanasios Rantos came to this assessment on Tuesday in the dispute between the German Federal Cartel Office and Facebook parent Meta. In general, the ECJ follows the Advocate General’s reasoning.
Facebook parent company Meta had criticized the actions of the German Federal Cartel Office, which intends to put a stop to the comprehensive collection of Facebook users’ data. The authority was exceeding its powers and disregarding the jurisdiction of the Irish data protection authority, the group argued. But Advocate General Rantos said Tuesday, that a competition authority can examine the compatibility of business practice with the European General Data Protection Regulation when exercising its powers. However, competition authorities would have to take into account any decision or investigation by the relevant data protection authority.
At the hearing prior to the ECJ in May, the Federal Cartel Office rejected Meta’s accusation that it had not cooperated with the Irish data protection authority, which is responsible for Facebook because of its headquarters in Ireland. The representative of the Bonn-based authority explained at the time that there had indeed been contacts with the Irish authority.
The Cartel Office ruled in 2019 that Facebook had abused its market power by collecting certain data from users without their explicit consent. This involved personal data that users enter on WhatsApp or Instagram and other services.
The antitrust office had also prohibited Facebook from combining user data from different sources with reference to data protection. The US company is taking legal action against this. The Düsseldorf Higher Regional Court, which was ultimately responsible, referred the case to the ECJ for clarification of key issues by the European court. rtr
After the Commission presented a proposal to reform the electricity market to reduce electricity and gas prices last week, the Czech Council Presidency handed in the first compromise proposals. Although the draft states that the electricity price cap should be €180 per MWh, member states have the option to introduce a higher cap if generation costs exceed €180. But in this case, countries should still set their own cap. However, this should not cause more carbon emissions.
The price cap would also apply to electricity from lignite, but not from hard coal. Member states could, however, define national measures to limit the revenues from hard-coal-fired generation. Provided they do not interfere with the merit-order principle and price formation on the wholesale market.
As proposed by the Commission, the reduction in peak electricity demand would be 5 percent. But under the presidency’s proposal, peak demand would not be calculated monthly, but based on the highest consumption in at least 10 percent of hours between Dec. 1, 2022, and March 31, 2023.
The levy of 33 percent of the surplus profits of the fossil industry should continue to be implemented in favor of a temporary solidarity contribution. However, member states are to be able to waive the levy if they can demonstrate “equivalent national measures” that have already been implemented. Member states should also be able to use surplus revenues from congestion income to finance measures to support electricity end customers. luk
The German government has initiated a debate on the expansion of majority voting in Brussels. The so-called Qualified Majority Voting (QMV) should also be introduced in foreign policy and sanctions decisions, said Anna Lührmann, Minister of State for Europe, on the sidelines of the General Council in Brussels. She added that discussions with like-minded countries were underway.
The Czech presidency supports the German initiative. A majority of the EU states are willing to discuss QMV, said Czech Minister for European Affairs Mikuláš Bek after the Council meeting. However, for the 27 to abandon the unanimity principle, there is a need to build trust. For example, through an impact assessment. In addition, it would be necessary to proceed “step by step.”
As expected, opposition came from Hungary, but also Ireland and Austria. In sanctions policy, “the true strength of the EU (…) is that we also take decisions unanimously,” said Austria’s EU Minister Karoline Edtstadler. “Citizens will not thank us if we allow ourselves to be distracted by procedural issues,” warned Irish Europe Minister Thomas Byrne. Poland has also already expressed its skepticism (Europe.Table reported).
Lührmann promised to address the skeptic’s concerns. The Green politician said she was “optimistic that progress is possible.” For this purpose, Berlin wants to use the so-called passerelle clause in the EU treaty, which allows the heads of state and government to decide when to switch to majority voting in certain areas.
However, this again requires unanimity. Hungary could therefore block the reform with a veto. In his speech on Europe in Prague at the end of August, German Chancellor Olaf Scholz called for a gradual transition to majority voting, which is also necessary for the admission of new members such as Ukraine, according to Berlin. ebo
The Hungarian government has submitted a first law to parliament to avert a threatened cut in EU funding. It provides for an incompatibility rule for members of boards of trustees of public foundations and improved administrative assistance for the EU’s Anti Fraud Office OLAF. The law appeared on the Hungarian parliament’s website on Monday evening. The government of Prime Minister Viktor Orbán plans to introduce another legislative package on Friday.
A particularly sensitive case is the public foundations to which the Orbán government has given most of the country’s universities. Their boards of trustees are composed almost exclusively of Orbán-loyal figures, including ministers and state secretaries. These individuals could not be replaced, even after a change of government.
The draft law now stipulates that board members of trustees may not participate in foundation decisions in which conflicts of interest would arise for them. Politicians, however, would not have to leave the boards of trustees in the future, Hungarian EU chief negotiator Tibor Navracsics hastened to explain on TV channel ATV on Tuesday. “The EU Commission does not expect that,” he said. Navracsics himself chairs a foundation that manages the Pannonian University in the western Hungarian city of Veszprém.
In addition, the law stipulates that the Hungarian tax authority NAV will provide administrative assistance to the investigators of the EU agency OLAF. Among other things, NAV is to make office premises available to OLAF colleagues during investigations in Hungary and give them access to the tax office’s databases and documents. dpa
Irishman Tony Murphy will be the new President of the European Court of Auditors (ECA). Murphy, born in 1962, achieved the required majority in the 27-member body in the second round of voting. Murphy takes office on October 1. He is the twelfth president of the supervisory body for all revenues and expenditures of the EU institutions and succeeds Klaus-Heiner Lehne, who did not run again after two terms. A term of office lasts three years.
Each EU member state sends one representative to the ECJ. The President of the ECA holds office as primus inter pares. Murphy has a long career as an accountant and auditor. He started as an auditor at the Irish Court of Audit in 1979 and moved to the Commission as a seconded national expert in 1999. An EU official since 2003, he moved to the ECA in 2013, initially heading a member’s cabinet. mgr
A successor to Klaus Regling at the ESM must be found by October 7. The Managing Director of the European Stability Mechanism, who has also headed the European Finacial Stability Facility (EFSF) since 2010, will retire on that day. The search for a successor has been entrusted to Paschal Donohoe, Finance Minister of Ireland and Head of the Eurogroup.
Donohoe tweeted yesterday that the two previous candidates to succeed Regling are no longer available. He said his colleagues, the finance ministers of Luxembourg and Portugal, had informed him that the respective candidates from the two countries were withdrawing their candidacies. Pierre Gramegna of Luxembourg and João Leão of Portugal were competing for the post. There was a stalemate in the Eurogroup. Gramegna was supported by a group of member states from northern Europe, Leão by southern member states.
Donohe praised both as “excellent candidates” and thanked them for their willingness to accept the post. He said he would continue his efforts to find a Regling successor. Observers believe the coordinated withdrawal of the two competing candidates is intended to clear the way for a compromise candidate. mgr
With the help of the EU Commission, a total of 14 million tons of agricultural products have been exported from Ukraine so far. Through so-called solidarity lanes and the Black Sea ports, mainly grain and oilseeds have been delivered from Ukraine to the EU since the start of the Russian war of aggression, an EU official said Tuesday. Sixty-one percent of the goods were reportedly transported via the specially established corridors, while the remaining 39 percent were shipped via the Black Sea.
According to the Commission, under normal circumstances, 90 percent of Ukraine’s grain and oilseed exports – which include sunflower and rapeseed – are shipped through the country’s Black Sea ports. In May, 20 million tons of grain were still stuck in Ukraine, threatening to block storage facilities needed for the next harvests, according to the EU Commission.
As the EU official further explained, the goods have been transported mainly by land via Poland and parts of southeastern Europe. This way, humanitarian aid, for example, could be brought to Ukraine. Soon, transport routes via Central Europe, for example to France, Spain or Italy, will be opened up.
One hurdle in transporting the goods is that Ukrainian train cars are not compatible with most of the EU rail network, the EU official explained. A study will now be conducted to show how many routes are affected by the problem so that subsequent adjustments can be made. Until now, most goods had to be reloaded onto trucks or other wagons. dpa
At a time when turbulence in Europe’s energy market is making daily headlines, Jan Rosenow remains optimistic: “On the whole, I think we’re well on the way to achieving our climate targets,” he says in response to the question of what the energy system will look like in ten years.
The 42-year-old is Head of European Programs at the Regulatory Assistance Project (RAP). RAP is a “think-and-do-tank,” as Rosenow likes to call it. The organization works hand-in-hand with decision-makers in several regions around the world to push the energy revolution. “Our focus is decarbonization and that we are creating a clean energy system through smart policy, regulation, and market design,” he says.
Rosenow grew up in a village near Bielefeld. His father was an active member of the Green Party. As early as the third school year, he encouraged his classmates to take part in aid campaigns, he says. “We collected waste or built birdhouses that we sold at the weekly market, then donated the proceeds to rainforest conservation organizations, for example.”
After studying geosciences in Münster, Rosenow completed a master’s degree in environmental policy at the London School of Economics, which was followed by a Ph.D. in Energy Policy at Oxford. His expertise in energy market issues is in high demand. The European Commission, the European Parliament, the International Energy Agency, USAID, and the British Parliament are just some of the institutions that called on him as a consultant.
In his current assignment at the RAP, Rosenow supports the EU in its ambitious goal of being climate neutral by 2050. In doing so, he observes that some sectors make more progress than others. “The energy sector, by and large, is on a good path, and we understand how to scale these technologies,” he says.
He sees a lot of pent-up demand in transportation, construction and heating, as well as in industry. Europe must invest massively in technologies and pursue strategic policies to increase its energy efficiency, he says – that means heat pumps, eVs, energy refurbishments, and other measures that “reduce energy waste and inefficiency in the system”.
In his view, the current energy crisis created by the Russian invasion of Ukraine will “massively accelerate” the energy transition. It will be necessary to accept that coal-fired power plants will have to be ramped up again in the short term and that some construction on the gas infrastructure will be needed, Rosenow said. “The more important step I see is a massive investment in green technologies.” He believes, that the current high energy prices would provide a powerful boost in that regard. Michael Grubb