SOTEU: What is really new + Forced labor • Table.Briefings

Dear reader,

There was much praise for Ursula von der Leyen yesterday for her State of the Union speech. However, some of her proposals are no longer quite so fresh. In the case of the European Hydrogen Bank, for example, only the name is new. Still, there were surprises, such as the fact that the middle class received so much attention in her speech. We listened closely and summarized the most important statements made by the Commission President and initial reactions. In our news section, we also report on the details of the planned reform of the EU electricity market.

The proposal for a ban on products from forced labor, which the Commission has now presented, is also receiving much attention. Evidence should be sufficient to ban products from the European market resulting from forced labor. This would mean that products from the Chinese province of Xinjiang would soon have a hard time on the European market, as Amelie Richter analyzes – for example, Christmas tree decorations. However, in the view of experts, one weak point is that the ban does not apply to services.

As always, the devil is in the details: Google lost its legal dispute with the Commission before the General Court of the European Union. But the court found some procedural errors, which is why it reduced the fine. Google now has to pay €4.125 billion instead of €4.34 billion. The court criticized – as it had in its Intel ruling – that the Commission had made mistakes in assessing Google’s economic position. Nevertheless, many observers see the ruling as strengthening the Commission – just on the day when the Digital Markets Act (DMA) was also officially signed. Corinna Visser has the details.

As we reported yesterday Ska Keller is about to retire from the front row of the European Greens. Now it’s official: Keller, the most important Green politician at the EU level since 2016, is stepping down from her post as Co-leader of the Greens in the parliament. In a statement, she spoke of a “personal decision.” “Thank you, Ska,” the group tweeted yesterday evening.

Your
Sarah Schaefer

SOTEU: what von der Leyen announced – and what is just repacked

Ursula von der Leyen and several female commissioners had agreed: all of them dressed in the colors of the Ukrainian national flag. Next to them on the commission bench was Olena Selenska, the wife of the Ukrainian president. “Dear Olena,” von der Leyen addressed her, “it took immense courage to resist Putin’s cruelty. But you found that courage.”

Ukraine also received a prominent place in her speech on the state of the Union. In parts, von der Leyen gave the impression that Ukraine was already a member state and that lengthy accession negotiations were no longer necessary. Immediately after the speech, she announced, that she would fly by helicopter to Kiev and pay a visit to Volodomyr Selenskyj. She aims to intensify trade relations: “Our Single Market is one of Europe’s greatest success stories. Now it’s time to make it a success story for our Ukrainian friends, too.”

Energy: three billion for hydrogen bank

The Commission wants to make three billion euros available for green hydrogen imports. “It has to do with how we match tomorrow’s demand and supply. That is why I can today announce that we will create a new European Hydrogen Bank,” von der Leyen said yesterday in Strasbourg. The funds are to come primarily from the Innovation Fund.

According to a letter of intent, the Commission intends to present a formal proposal next year. However, only the name is new. As Europe.Table has confirmed from within the Commission, the hydrogen bank is essentially the Global European Hydrogen Facility, which the Commission had already announced in REPowerEU. It is the hydrogen strand of the EU energy platform, which is intended to procure green gases on the world market in addition to natural gas in the medium term.

The model is the German instrument H2Global, which concludes contracts for differences with sellers and buyers and thus acts as a market maker. In REPowerEU, the Commission announced that it would import ten million tons of renewable hydrogen by 2030.

The European Investment Bank positioned itself as a partner of the hydrogen bank yesterday. “The EIB Group will continue to work with the EU Commission & our partners to support the green hydrogen sector,” wrote EIB President Werner Hoyer. The bank says it has provided the hydrogen industry with loans totaling EUR 550 million since 2011, triggering EUR 1.2 billion in investment.

The industry association Hydrogen Europe welcomed the announcement of a European Hydrogen Bank. Scientist Thomas Wyns from the Brussels School of Governance expressed his concern. With a volume of three billion euros, there is the danger that the EU will promote technologies that will never become marketable – as was the case with an earlier fund for the capture and storage of CO2 (CCS). ber

Raw materials and trade: new attention

“Lithium and rare earths will soon be more important than oil and gas,” von der Leyen emphasized. She said that European demand for rare earths alone will increase fivefold by 2030 on the way to achieving the Green Deal goals. Access to these raw materials is crucial, she said, which is why dependencies must be avoided.

Von der Leyen referred to the Raw Materials Act, which has been announced for some time by Internal Market Commissioner Thierry Breton and which he specified yesterday in a LinkedIn article. Accordingly, targets could be set that at least 30 percent of the EU’s demand for refined lithium must come from the EU by 2030, or that at least 20 percent of rare earths must be recovered, he wrote.

Particularly strategic raw materials are to be identified based on criteria, and possible bottlenecks anticipated with the help of national authorities. Regarding raw materials processing, which largely takes place in China, the Commission wants to identify strategic projects along the entire supply chain and classify them as being “in the European interest.” This should speed up the realization of the projects. To improve funding opportunities, the EU is to participate more in nationally organized IPCEIs. Von der Leyen also announced a European Sovereignty Fund – but when asked yesterday, the Commission was unable to provide details.

For areas where supplies are at risk, von der Leyen announced the establishment of strategic reserves. The industry has long been calling for the stockpiling of particularly critical materials, which previously has not been financially viable for companies. The BDI is therefore proposing tax relief in form of a “raw materials stockpiling reserve.”

Von der Leyen also wants to solve the existing dependencies with the help of new partnerships. Specifically, she mentions the free trade talks with Chile, Mexico and New Zealand, which she wants to submit to the Council and the European Parliament for ratification before the end of this legislative period. In the case of New Zealand, this should be unproblematic. With Mexico, the Commission is currently looking for a way to split the modernized agreement, which has already been agreed upon in principle, into a trade and an investment part. Negotiations on an agreement with Chile are at an advanced stage, but political turbulence in the resource-rich country is creating new uncertainties. leo/tho

Economy: relief for the middle class

In the second half of October, the Commission intends to present its reform proposals for the Stability and Growth Pact. In terms of content, however, von der Leyen presented little that was new. The basic principles: The member states are to be given more leeway in reducing debt, the agreed debt reduction is to be monitored more strictly in return, and the rules simplified. However, Nils Redeker, Vice-Director of the Jacques Delors Centre at the Hertie School, says that it will be complicated to formulate these principles into a consensual reform proposal. In many details, the member states are “still far apart.”

In her speech, von der Leyen gave an unusually large amount of space to small and medium-sized businesses. She was responding to demands from the business community and the EPP: Patricia Lips, Vice Chair of the CDU/CSU parliamentary group in the German Bundestag, for example, called for “a moratorium on red tape and burdens” for all pending legislation at European level. However, von der Leyen does not want to withdraw the proposals on the Supply Chain Act or industrial emissions, for example. Instead, she promises an SME relief package:

Company taxation in the internal market is to be standardized to a greater extent. The Commission gave the impetus for this last year and is currently working on the legislative proposal and consulting stakeholders, according to the Commission. The initiative, called BEFIT, is to build on the proposals for a common tax base, which failed due to resistance from the member states. In addition, it is to take into account elements of the tax deal agreed at the OECD level, in particular the first pillar, which redefines the place of taxability of companies.
In addition, the 2011 Late Payment Directive is to be revised. “It is simply not fair that 1 in 4 bankruptcies are due to invoices not being paid on,” von der Leyen said.
Von der Leyen wants to address the growing shortage of skilled workers by declaring 2023 the “European Year of Education and Training.” To make recruiting foreign employees easier, their qualifications should be recognized more quickly.

Industry representatives such as VDMA CEO Thilo Brodtmann are “positively surprised” by the unusual attention paid to SMEs. However, the relief package should “under no circumstances become a paper tiger.” The head of the DIHK representative in Brussels, Freya Lemcke, is skeptical: According to previous plans, the BEFIT initiative is aimed primarily at stock corporations and limited liability companies, but the vast majority of SMEs in Germany are run as partnerships. Therefore, “the majority of German SMEs would not be covered by these measures if the current plans were to be maintained.”

Digital policy: into the metaverse

Von der Leyen mentioned Europe’s digital transformation only in a few places. Only in her letter of intent to the President of Parliament and the Czech Council Presidency did the Commission President announce her intention to address new trends such as the metaverse.

Details of Europe’s plan to thrive in the metaverse came from Breton. He named three starting points:

People: In this new virtual world, European values would have to be anchored from the start. Breton stresses the importance of interoperable standards and that no private actor should hold the key to public space or set its terms.
Technology: Breton announces a Virtual and Augmented Reality Industrial Coalition, bringing together players in key metaverse technologies. He says there is already a roadmap supported by more than 40 EU organizations – from large companies to SMEs and universities.
Infrastructure: Breton states that the new virtual worlds will put even more pressure on connectivity infrastructure. At the same time, he says, the current economic climate is causing investment returns to stagnate and the cost of deploying lines to rise. Here, Breton points to his controversial plan to have big tech companies such as Google and Facebook share in infrastructure costs. vis

Foreign policy: power of democracies

In foreign policy, von der Leyen emphasized new features. The agenda must be geared more toward like-minded partners, she said. It was “time to invest in the power of democracies.” For example, the accession candidates in the Western Balkans, as well as Ukraine, Georgia and Moldova, are to receive more support. The EU decided in June to grant candidate status to Ukraine and Moldova. Von der Leyen is now also upgrading Georgia.

The German Head of the Commission also supports the initially controversial proposal by the French Head of State Emmanuel Macron for a “European Political Community.” It could include countries such as Ukraine, Great Britain, or Turkey – the Commission wants to present concrete proposals to the European Council. The Czech presidency has already convened the first summit on October 6 and 7 in Prague.

At the international level, the “Global Gateway” initiative, which the Commission conceived as an alternative to the Chinese Silk Road project, is to be expanded. Here, von der Leyen is seeking to close ranks with US President Joe Biden. She said that a joint summit would be convened to discuss concrete investment projects. She also wants to invite other G7 partners. A date was not given. Factories in Rwanda and Senegal, where modern mRNA vaccines are produced, serve as models. Similar projects are also planned in Latin America, she said. ebo

Rule of Law: defense pact for democracy

Von der Leyen announced a pact to defend democracy. The aim, she said, was to declare war on covert influence from outside the EU. Earlier this year, the University of Amsterdam closed down an allegedly independent institute that was actually paid for by China. The institute had spread that the reports of forced camps for Uyghurs were mere rumors.

But it is also about fighting corruption from within. Von der Leyen announced a revision of EU legislation against corruption for the coming year. In addition to the classic criminal offenses such as bribery and corruption, this would also include illegal enrichment, influence peddling and abuse of power. She will also propose to include corruption in the system of human rights sanctions, the new instrument for protecting EU values abroad.

Without mentioning names, von der Leyen also warned, “We will not allow any autocracy’s Trojan horses to attack our democracies from within.” On Twitter, the Green Daniel Freund gets specific: “Yes, Viktor Orbán, the sentence is for you.” mgr

EU reform: plea for a convention

The Commission President unexpectedly direct speaks out in favor of a convention to revise the EU treaties. The time had come for this. The European Parliament has spoken out in favor of it, and Chancellor Olaf Scholz is also open to the idea. Many member states, however, shy away from the lengthy process of amending the treaties. But they would have to agree by a majority to convene a convention; treaty reform even requires unanimity.

Von der Leyen is not very specific about reforms that would also be possible under the Lisbon Treaty. The Conference on the Future of Europe had developed numerous proposals. The citizens’ panels that proved their worth there should now become “an integral part of our democratic life,” she says. In what form, she does not say. tho

EU Commission also takes targets products from Xinjiang

By

Amelie Richter

After several delays, the EU Commission has presented its highly observed proposal for a ban on products from forced labor. In the future, forced labor products are to be banned from the European market without exception. According to the standards of the Commission’s proposal, products from the Chinese province of Xinjiang would soon have a hard time on the European market.

Unlike the US Uyghur Forced Labor Prevention Act (UFLPA), the EU proposal is a marketing ban, not a pure import ban. Furthermore, the bill is not aimed at a specific region or products like the US legislation. The burden of proof is also different. What both laws have in common, however, is that a verifiable suspicion of forced labor is sufficient to remove a product from the domestic market and ban its import and export.

“Our aim is to eliminate all products made with forced labor from the EU market, irrespective of where they have been made,” said EU Commissioner for Trade, Valdis Dombrovskis. The 27 member countries are responsible for implementing the ban. National customs or market surveillance authorities are to enforce the ban.

‘Risk-based approach’ with database

How is the ban supposed to work? The EU Commission refers to its proposal as a “risk-based approach“. In the first stage, authorities of EU member states are to identify forced labor risks. This will be based on information, for example, from civil society, NGOs or companies. This information will also feed into a risk factor database. For example, witness testimonies, NGO reports and other documents on human rights violations will be compiled there.

The suspicion that a particular product was manufactured with forced labor can be raised by various bodies. In a second phase, national authorities must then request further information from companies or conduct audits and inspections, including of suppliers. If a violation is identified, the product will have to be removed from the European domestic market within six weeks. If an investigation stalls because the company in question or even the country of production refuses to cooperate, the product can simply be blocked on suspicion. This is to prevent endless review loops and stalling tactics by the involved country.

Small and medium-sized enterprises (SMEs) also fall within the scope of the draft law. However, enforcement will likely focus on large companies. Aspects such as the scale of business activity and the volume of products affected are to be taken into account during the investigation. SMEs are also to receive special help for the audit of their supply chains.

Forced labor according to ILO definition difficult in China

What is considered forced labor in the first place will be determined based on the International Labor Organization (ILO). The United Nations organization has defined what is considered forced labor in Conventions 105 and 29.

And this is where a major problem for trade with China lies. The People’s Republic has signed and ratified both conventions (China.Table reported) – but the leadership in Beijing still refuses to acknowledge that forced labor exists in the country at all.

However, sufficient data should be available for the planned database for a risk-based suspicion approach. This way, the authorities do not have to prove forced labor individually down to the last detail to be able to ban products. There is sufficient documented evidence of forced labor in Xinjiang, not least the report by former UN Human Rights Commissioner Michelle Bachelet and verifiable witness statements by victims.

“Not every product can be checked 100 percent,” says Bernd Lange (Social Democratic Party), Chairman of the EU Parliament’s Committee on International Trade. But it can be identified, for example, that a product like Christmas tree ornaments largely comes from China’s Xinjiang province. In such cases, Lange says, “there will be changes in the value chains.” German companies in Xinjiang, including VW and BASF, would also have to take a close look at their supply chains.

Loophole for state-imposed forced labor

But there is one loophole in the EU proposal regarding China: In the case of forced labor in Xinjiang, the state is the executing force. It is not clearly stated how this should be dealt with. “The ambiguity of the Commission’s proposal on state-imposed forced labor is deeply concerning,” says Helene de Rengerve of the organization Anti-Slavery International. “The lack of clear procedures severely limits the power to force companies to remove state-imposed forced labor from their supply chains,” de Rengerve said.

The Commission’s proposal is also criticized because it does not provide for any compensation for victims of forced labor. Those affected cannot claim compensation. The fact that the ban applies to products but not to services is also a weak point of the draft legislation.

Differing opinions in EU Parliament

What happens next? First, the European Parliament and the Council of Member States must define their positions. That might take some time. The EU Commission’s proposal must now be analyzed and, if necessary, improved, wrote Trade Committee Chairman Lange on Twitter. It will likely take until early next year for MEPs to define their position for negotiations with the Commission and the EU Council. Conservative MEPs have already called for the bill to be shelved. CDU politician Daniel Caspary, for example, called for a general moratorium on EU laws “that hinder economic activity.”

The SPD MEP and Vice Chair of the Parliament’s China delegation, René Repasi, sees some potential in the ban: “I assume that this legal act will have a great impact.” It is highly doubtful that Beijing will simply accept it. “There will be a reaction,” Repasi believes. But China cannot afford to restrict trade with the EU, he adds. He does not expect major disruptions to trade chains, Repasi says. EU companies will have sufficient time to prepare: Once the EU institutions have agreed on a legislative proposal, it should take a full 24 months for the ban on forced labor products to take effect.

EU court confirms billion-dollar fine against Google

By

Corinna Visser

Once again, Google has suffered a defeat before the General Court of the European Union. The court largely upheld the Commission’s decision from 2018, according to which Google imposed unlawful restrictions on manufacturers of mobile devices with the Android operating system and mobile network operators in order to strengthen the dominant position of its search engine. However, the court found fault with some procedural errors and reduced the fine from €4.34 billion to €4.125 billion.

“This is an important decision that sets standards for the treatment of digital ecosystems,” commented Düsseldorf-based antitrust expert Rupert Podszun. “The court confirms that the major gatekeepers of the Internet are improperly exploiting their power.”

Google expressed disappointment that the court did not completely overturn the commission’s original decision. “Android has created more choices for everyone, not less,” a company spokesperson said. “And supports thousands of successful businesses in Europe and around the world,” Google can appeal the court’s decision.

Abuse of dominant position

There were essentially three points on which the Commission accused Google of abusing its dominant position:

Google had required manufacturers to pre-install the Google Search app and the browser app (Chrome) in order to obtain licensing for Google’s app store.
Google had made payments to certain major manufacturers and mobile network operators on the condition that they pre-install only the Google Search app on their devices.
Google had prevented manufacturers that wanted to preinstall Google apps from selling other smart mobile devices if they were based on a version of Android not approved by Google.

Google argued that the decision ignores that Android competes intensively with Apple’s iOS operating system for users and developers. Furthermore, manufacturers were free to pre-install competitors’ apps in addition to Google’s apps. Moreover, users could have easily downloaded competing apps. Finally, Google’s compatibility requirements for Android had also been misrepresented. The requirements are necessary to ensure that apps written for Android devices work on all of them.

Commission error

The decision does not come as a complete surprise; the court had already sided with the Commission in the first major Google case, commented antitrust lawyer Podszun. “Nevertheless, Competition Commissioner Margrethe Vestager can make good use of the decision – the Commission has recently been defeated in court several times.” He said the Commission keeps tripping up on the “as efficient competitor test” (AEC test). “That’s an economic test that many economists don’t even consider applying, but it’s used repeatedly in antitrust abuse proceedings. In the overall view, however, it is manageable in this decision,” Podszun said.

In fact, the Court of First Instance found several errors of reasoning in the assessment of essential variables of the AEC test carried out by the Commission, “namely, the estimate of the costs attributable to such a competitor, the assessment of its ability to achieve the pre-installation of its app, and the estimate of the revenue that can be obtained according to the age of the mobile devices in circulation”. It follows that the AEC test, as conducted by the Commission, is not capable of confirming the finding of abuse, so the Court upholds the corresponding plea. This was one of the reasons for the reduction of the fine.

Podszun also finds it interesting that the court explicitly recognizes arguments with behavioral economics aspects, “namely the status quo bias in favor of default settings.” However, “It’s always individual points that the competition authorities win here, but in the actual race, they’re just chasing the gatekeepers,” Podszun added. “That’s where the DMA may be a game-changer. “

He said the court’s decision strengthens the Commission’s hand in implementing the Digital Markets Act (DMA). “The court is signaling that it takes the dangers posed by digital ecosystems seriously. This is important, otherwise, the DMA would be quickly crushed by case law,” Podszun explained.

Parliamentarians and Consumer Association welcome the ruling

Andreas Schwab, EPP Group spokesman on internal market policy and rapporteur on the Digital Markets Act, welcomed the court’s decision, although this ruling comes many years too late. “It confirms the need to ban such market-damaging practices in the digital space through specific ex ante obligations,” Schwab said. He added that this was already confirmed last year by the Google Shopping ruling. With the Google Shopping and Android rulings and the entry into force of the DMA, “we can therefore definitely say: ‘Game over’ for unfair business practices!”.

Rasmus Andresen, the spokesman for the German Green Party and shadow rapporteur for the DMA in the Industry Committee, takes a similar view. He says the ruling strengthens EU competition law. “The big digital corporations, with their deep pockets and large legal departments, are usually very good at using lawsuits to postpone fines and show up the competition authorities,” Andresen said. He now expects something to change structurally and that “in the future, we will no longer have to deal with such protracted legal proceedings, but will implement the Digital Markets Act quickly.” In addition, he said, the EU Commission must submit a proposal to tighten up competition law in order to prevent abuse of market power from the outset or to put a stop to it more quickly.

European consumer association BEUC also welcomed the ruling, saying it confirms that European consumers must have a meaningful choice between search engines and browsers on their phones and tablets. “The court ruling makes it clear that Google cannot abuse its strong market position to unfairly exclude competitors through a complex and unlawful web of restrictions and requirements on phone manufacturers,” commented Monique Goyens, Director General of BEUC. “Google’s restrictions have harmed many millions of European consumers by depriving them of real choice and innovation for a decade.”

Energy market reform: proposals to yield €140 billion for member states

It was a clear message: “The current electricity market design – based on merit order – is not doing justice to consumers anymore,” said Ursula von der Leyen in her State of the Union address. That is why the Commission is seeking comprehensive reform of the electricity market to decouple the price of electricity from the dominant price of gas. The reform is to be implemented “early next year,” according to Energy Commissioner Kadri Simson. These measures have been announced:

A reduction in electricity demand at peak times. EU member states are to save ten percent of total electricity demand, although this target is not binding. Instead, a mandatory reduction of five percent during peak periods is earmarked. So far, member states have decided on voluntary commitments.
Capping the revenues of electricity generators that produce at low cost – i.e., renewables, nuclear, etc. The Commission proposes to set its revenue cap at €180 per megawatt hour. The introduction of the price cap is up to the member states.
The Commission also proposes a temporary solidarity contribution for oil, coal, and gas companies not covered by the other cap. Taxable profits 20 percent higher this year than the average of the previous three years will be taxed at an additional rate of 33 percent.
These two proposals are expected to generate about €140 billion for member states, €117 billion from the revenue cap, and €25 billion from the solidarity contribution.
The benchmark used in the gas market – the TTF – is to be replaced by a new, more representative standard.
The commission is also proposing to expand the energy price toolbox to help consumers. The proposals would allow regulated electricity prices below the cost of generation and extend regulated prices to small and medium enterprises.

There is to be no cap on gas prices, not even for Russian gas, and no joint gas purchases. The Commission also wants to distinguish between “reliable” and “unreliable” supplier countries and organize bilateral negotiations with reliable suppliers.

Thomas Pellerin-Carlin, Director of the Jacques Delors Energy Center, finds it is too early to judge whether the projected €140 billion in revenue is realistic. This would depend on how governments implemented the proposed legislation. The success of the profit levy would depend on how the revenue was used, he said: “If it is to finance national subsidies for fossil fuels, then it will exacerbate the crisis. If it’s used to fund renewables and energy efficiency, then those investments will make sense.” cst

France caps price increases for electricity and gas

France wants to allow price increases for electricity and gas in the coming year only up to a ceiling of 15 percent. This was announced by Prime Minister Élisabeth Borne on Wednesday.

Borne said the maximum 15 percent price increase for gas would take effect in January next year, while the 15 percent price increase for electricity would take effect in February. “We are going to take action on both a European level and on a national level,” she added.

According to Finance Minister Bruno Le Maire, the cost of the price cap is €16 billion. rtr

Sweden’s Prime Minister Andersson resigns after election

Swedish Social Democratic Prime Minister Magdalena Andersson is resigning after losing the parliamentary elections. The opposition right-wing alliance won the vote, Andersson conceded at a press conference Wednesday night. “It’s a thin majority, but it’s a majority,” she added. She said she would therefore submit her resignation as Prime Minister on Thursday. She said it was important for the Nordic country to have a new government as soon as possible.

A shift to the right is emerging in Sweden. Three days after the parliamentary elections and after 98 percent of the votes had been counted, the right-wing camp of moderates, Sweden Democrats, Christian Democrats, and Liberals had 175 seats, one seat ahead of the ruling left-wing bloc (174 seats) with the Social Democratic Head of Government Andersson. This means that for the first time, the right-wing populist Sweden Democrats are within reach of government participation. The party under its leader Jimmie Åkesson has become the second most potent force behind the Social Democrats. Its origins lie in right-wing extremism, from which it has since distanced itself.

Although the Sweden Democrats received more votes than the moderates in the parliamentary election, their candidate Ulf Kristersson is considered a likely new Head of Government should the right-wing camp agree on a partnership. Kristersson announced his intention to form a government shortly after Andersson’s resignation.

The election campaign was also thematically dominated by gang crime and immigration. These issues were pushed by the Sweden Democrats, who see one of the causes of crime in the influx of migrants. The leader of the Sweden Democrats thus wants to introduce the toughest immigration rules in Europe in his country.

In addition to domestic political difficulties, Sweden is facing major foreign policy challenges. As a result of the Ukraine war, the country wants to abandon its decades of neutrality and become a member of NATO. The Nordic country is also looking for ways out of the energy crisis and rising inflation. rtr

Funding: European parties put on an equal footing with foundations

The EU Parliament is voting today on the regulation on party financing. The Commission had proposed that in future European political parties would only have to finance five percent of their budgets from their own funds. Previously, the figure was ten percent. This would put European party families on an equal footing with European foundations. It is expected that there will be a majority in favor of this matter in the plenum.

The Commission wants the co-payment to be reduced to zero in years with elections to the European Parliament. The Christian Democratic EPP in the European Parliament is opposed to the reduction to zero in election years and will table a motion to that effect. The Council, the body of the Member States, is in principle against a reduction of the necessary co-payments.

The parliament will not require transnational lists in the legal text. The Liberals in particular had campaigned for transnational lists in EU elections. So far, eligible voters can only vote on national lists. With transnational lists, several candidates would run in elections to the EU Parliament in all 27 member states. Candidates from several EU countries could then stand for election across Europe. This measure should lead to a pan-European awareness.

Rapporteur Rainer Wieland (CDU) accuses the Commission of “grossly unsportsmanlike conduct”. The background is that the Commission has placed the reform of party financing under “recast” in legislative terms. This means that co-legislators can only make changes to the rules that the Commission proposes. The parliament, for example, cannot add its own items to the legislative text in a “recast” legislative procedure. mgr

EU Parliament votes for uniform minimum wage standards

The European Parliament has approved uniform standards for minimum wages in the EU. A large majority of MEPs on Wednesday voted in favor of a law previously negotiated by negotiators from the Parliament and EU states. This almost clears the way for the rules to come into force after a transition period of two years. The EU states still have to approve the plan, but this is considered a formality.

While the compromise does not set a uniform level, it does set standards for how statutory minimum wages can be set, updated, and enforced. In addition, EU countries must define action plans to increase collective wage coverage if their rate is below 80 percent.

The European Parliament’s Chief Negotiator, Dennis Radtke (CDU), said: “We need a functioning, strong social partnership everywhere in Europe.” But he would have liked the compromise to be more ambitious in parts: “Frankly, I find it intolerable that in some places – including Germany – it is possible to achieve the statutory minimum wage by allowing, for example, vacation pay, Christmas bonuses, allowances such as dirty work allowances, noise allowances or even tips to be included in the minimum wage.” However, it had not been legally possible to regulate this at the EU level.

The German government welcomed the agreed regulations. It said the one-time increase in the minimum wage to twelve euros per hour passed by the Bundestag was in line with the directive’s requirements. “In this respect, with regard to the minimum wage directive, after a preliminary examination, no need for adjustment is seen in the German minimum wage legislation,” the Labour Ministry said.

The European Union is not allowed to set specific wage levels but can issue guidelines. Nordic countries in particular have been critical of the project. Although there is no statutory minimum wage there, there is a relatively high level of collective bargaining. The countries feared that the EU would interfere too much in national affairs. dpa

Audit office gets new leadership

Today, the 27 members of the European Court of Auditors (ECA) elect a new president in Luxembourg. Klaus-Heiner Lehne, who was first elected to head the body in 2016 and confirmed in 2019, is not seeking a third term. The former CDU MEP will continue to serve on the Court; his term runs until 2026.

Each EU member country sends one representative to the Court. The first round of voting by secret ballot will start at 9 am. According to reports, there is no favorite. The statutes require candidates to announce their candidacy to the General Secretariat 24 hours before the first round of voting. Typically, candidates send a letter in advance to the other members informing them of their planned focus. The role of the president is to act as primus inter pares (prominent among equals).

Last year, Lehne was accused by the media of irregularities in the accounting of allowances. The Budgetary Control Committee of the European Parliament therefore initially refused to grant discharge for the financial year. In the vote in the plenum, however, the discharge was granted.

The background to the affair is probably that Lehne had previously pushed internally for the lifting of the former member’s immunity for Belgium. The reason for this was Karel Pinxten’s serious financial irregularities. The European Court of Justice (ECJ) also cut Pinxten’s pension by two-thirds because of the misdemeanors. Subsequently, Pinxten is said to have voiced accusations against Lehne, which individual media then picked up on. mgr

Regine Günther – many paths to carbon neutrality

Regine Günther has been the new Director of the Climate Neutrality Foundation since August 2022.

Climate targets should not be allowed to fail because of technical issues, says Regine Günther. She has been Director of the Climate Neutrality Foundation since August. The foundation makes recommendations to policymakers on how Germany can achieve its climate targets.

With climate neutrality, Germany and the EU have set themselves ambitious goals. “The task now is to achieve implementation as quickly as possible,” says Regine Günther.

For the 59-year-old, the new position is a logical continuation of past actions. She has been involved in the fight against climate change for more than 25 years. Günther headed the climate and energy department at WWF, and from 2016 to 2021, she was Senator in Berlin for the Environment, Transport and Climate Protection.

“As a senator, I was able to implement things in a very concrete way, though the reach is primarily local,” she says. Now her work has a longer perspective, the effect is not immediately visible. On the other hand, she says, the foundation has a Germany-wide, European and international focus. For Günther, the change was appealing; her work moves between NGOs, politics and the foundation: they could all contribute to climate protection in their own way. “These are very different levers to pull,” says Regine Günther, “and we need them all for effective climate protection.”

Climate neutrality and geopolitics

At the Climate Neutrality Foundation, she is now investigating how climate goals are linked to international geopolitics. Russia’s attack on Ukraine has massive implications for international climate policy, she said. “We need to consider how to establish the security of supply in strategic goods and raw materials that we need for a climate-neutral economy,” says the foundation’s director. We must not allow ourselves to be blackmailed, she adds. Countries can no longer be sure that the world market will provide all goods at all times.

Where does Germany get the raw materials for batteries? Where do strategically important goods come from? In the case of solar panels, for example, Germany is currently heavily dependent on China. This is a so-called cluster risk that should be broken down, says Regine Günther.

The foundation now wants to identify such political dependencies. There has not yet been a comprehensive systemic analysis. Regine Günther expects the first results in the first half of next year. Jana Hemmersmeier

The language of diplomacy is the unsaid. The Queen was a master at expressing the unsaid or unspeakable through her clothing. Her blue hat with yellow applications, presumably to express her opposition to Brexit, is unforgettable. Or the brooch she received as a gift from Barack Obama and wore during Donald Trump’s official visit.

In contrast, Commission President Ursula von der Leyen appeared yesterday in a yellow blazer and blue blouse for her State of the Union address. But it wasn’t just about what she said. It wasn’t even just about what she didn’t say, even if that concerned elementary areas such as defense and security.

Some messages could be understood from the language she used to convey which themes of her speech.

Von der Leyen, who is known for preferring English to German in public appearances, accordingly delivered most of the speech in English. For example, she again pledged her full support to Olena Selenska, First Lady of Ukraine, who was present at the event and backed this up with, among other things, €100 million for the reconstruction of destroyed schools. She also dealt with the measures against the energy crisis in English.

But when it came to the expansion of renewable energies, wind and solar power, and, above all, the announcement of a hydrogen bank, the Belgian native switched to French – perhaps true to the motto: Communicate in such a way that you are understood? She did not mention nuclear power, France’s hobby horse and main energy strategy.

She also apparently had a message for Germany, the country of the middle class, the largest industrialized nation in the EU, and the country with a preference for the “change through trade” strategy: She warned against building new dependencies, this time in raw materials such as rare earths. Now is the time, she said, to enter into new trade relationships with like-minded partners so as not to repeat the mistakes of the past. She said all this in her native language. Lisa-Martina Klein

EUROPE.TABLE EDITORS

Till
Hoppe

Charlotte
Wirth

Falk
Steiner

Timo
Landenberger

Corinna
Visser

Lukas
Knigge

Eric
Bonse

Sarah
Schaefer

Manuel
Berkel

Lisa-Martina
Klein

Markus
Grabitz

Stephan
Israel

Claire
Stam

Dear reader,

There was much praise for Ursula von der Leyen yesterday for her State of the Union speech. However, some of her proposals are no longer quite so fresh. In the case of the European Hydrogen Bank, for example, only the name is new. Still, there were surprises, such as the fact that the middle class received so much attention in her speech. We listened closely and summarized the most important statements made by the Commission President and initial reactions. In our news section, we also report on the details of the planned reform of the EU electricity market.

The proposal for a ban on products from forced labor, which the Commission has now presented, is also receiving much attention. Evidence should be sufficient to ban products from the European market resulting from forced labor. This would mean that products from the Chinese province of Xinjiang would soon have a hard time on the European market, as Amelie Richter analyzes – for example, Christmas tree decorations. However, in the view of experts, one weak point is that the ban does not apply to services.

As always, the devil is in the details: Google lost its legal dispute with the Commission before the General Court of the European Union. But the court found some procedural errors, which is why it reduced the fine. Google now has to pay €4.125 billion instead of €4.34 billion. The court criticized – as it had in its Intel ruling – that the Commission had made mistakes in assessing Google’s economic position. Nevertheless, many observers see the ruling as strengthening the Commission – just on the day when the Digital Markets Act (DMA) was also officially signed. Corinna Visser has the details.

As we reported yesterday Ska Keller is about to retire from the front row of the European Greens. Now it’s official: Keller, the most important Green politician at the EU level since 2016, is stepping down from her post as Co-leader of the Greens in the parliament. In a statement, she spoke of a “personal decision.” “Thank you, Ska,” the group tweeted yesterday evening.

Your
Sarah Schaefer

SOTEU: what von der Leyen announced – and what is just repacked

Ursula von der Leyen and several female commissioners had agreed: all of them dressed in the colors of the Ukrainian national flag. Next to them on the commission bench was Olena Selenska, the wife of the Ukrainian president. “Dear Olena,” von der Leyen addressed her, “it took immense courage to resist Putin’s cruelty. But you found that courage.”

Ukraine also received a prominent place in her speech on the state of the Union. In parts, von der Leyen gave the impression that Ukraine was already a member state and that lengthy accession negotiations were no longer necessary. Immediately after the speech, she announced, that she would fly by helicopter to Kiev and pay a visit to Volodomyr Selenskyj. She aims to intensify trade relations: “Our Single Market is one of Europe’s greatest success stories. Now it’s time to make it a success story for our Ukrainian friends, too.”

Energy: three billion for hydrogen bank

The Commission wants to make three billion euros available for green hydrogen imports. “It has to do with how we match tomorrow’s demand and supply. That is why I can today announce that we will create a new European Hydrogen Bank,” von der Leyen said yesterday in Strasbourg. The funds are to come primarily from the Innovation Fund.

According to a letter of intent, the Commission intends to present a formal proposal next year. However, only the name is new. As Europe.Table has confirmed from within the Commission, the hydrogen bank is essentially the Global European Hydrogen Facility, which the Commission had already announced in REPowerEU. It is the hydrogen strand of the EU energy platform, which is intended to procure green gases on the world market in addition to natural gas in the medium term.

The model is the German instrument H2Global, which concludes contracts for differences with sellers and buyers and thus acts as a market maker. In REPowerEU, the Commission announced that it would import ten million tons of renewable hydrogen by 2030.

The European Investment Bank positioned itself as a partner of the hydrogen bank yesterday. “The EIB Group will continue to work with the EU Commission & our partners to support the green hydrogen sector,” wrote EIB President Werner Hoyer. The bank says it has provided the hydrogen industry with loans totaling EUR 550 million since 2011, triggering EUR 1.2 billion in investment.

The industry association Hydrogen Europe welcomed the announcement of a European Hydrogen Bank. Scientist Thomas Wyns from the Brussels School of Governance expressed his concern. With a volume of three billion euros, there is the danger that the EU will promote technologies that will never become marketable – as was the case with an earlier fund for the capture and storage of CO2 (CCS). ber

Raw materials and trade: new attention

“Lithium and rare earths will soon be more important than oil and gas,” von der Leyen emphasized. She said that European demand for rare earths alone will increase fivefold by 2030 on the way to achieving the Green Deal goals. Access to these raw materials is crucial, she said, which is why dependencies must be avoided.

Von der Leyen referred to the Raw Materials Act, which has been announced for some time by Internal Market Commissioner Thierry Breton and which he specified yesterday in a LinkedIn article. Accordingly, targets could be set that at least 30 percent of the EU’s demand for refined lithium must come from the EU by 2030, or that at least 20 percent of rare earths must be recovered, he wrote.

Particularly strategic raw materials are to be identified based on criteria, and possible bottlenecks anticipated with the help of national authorities. Regarding raw materials processing, which largely takes place in China, the Commission wants to identify strategic projects along the entire supply chain and classify them as being “in the European interest.” This should speed up the realization of the projects. To improve funding opportunities, the EU is to participate more in nationally organized IPCEIs. Von der Leyen also announced a European Sovereignty Fund – but when asked yesterday, the Commission was unable to provide details.

For areas where supplies are at risk, von der Leyen announced the establishment of strategic reserves. The industry has long been calling for the stockpiling of particularly critical materials, which previously has not been financially viable for companies. The BDI is therefore proposing tax relief in form of a “raw materials stockpiling reserve.”

Von der Leyen also wants to solve the existing dependencies with the help of new partnerships. Specifically, she mentions the free trade talks with Chile, Mexico and New Zealand, which she wants to submit to the Council and the European Parliament for ratification before the end of this legislative period. In the case of New Zealand, this should be unproblematic. With Mexico, the Commission is currently looking for a way to split the modernized agreement, which has already been agreed upon in principle, into a trade and an investment part. Negotiations on an agreement with Chile are at an advanced stage, but political turbulence in the resource-rich country is creating new uncertainties. leo/tho

Economy: relief for the middle class

In the second half of October, the Commission intends to present its reform proposals for the Stability and Growth Pact. In terms of content, however, von der Leyen presented little that was new. The basic principles: The member states are to be given more leeway in reducing debt, the agreed debt reduction is to be monitored more strictly in return, and the rules simplified. However, Nils Redeker, Vice-Director of the Jacques Delors Centre at the Hertie School, says that it will be complicated to formulate these principles into a consensual reform proposal. In many details, the member states are “still far apart.”

In her speech, von der Leyen gave an unusually large amount of space to small and medium-sized businesses. She was responding to demands from the business community and the EPP: Patricia Lips, Vice Chair of the CDU/CSU parliamentary group in the German Bundestag, for example, called for “a moratorium on red tape and burdens” for all pending legislation at European level. However, von der Leyen does not want to withdraw the proposals on the Supply Chain Act or industrial emissions, for example. Instead, she promises an SME relief package:

Company taxation in the internal market is to be standardized to a greater extent. The Commission gave the impetus for this last year and is currently working on the legislative proposal and consulting stakeholders, according to the Commission. The initiative, called BEFIT, is to build on the proposals for a common tax base, which failed due to resistance from the member states. In addition, it is to take into account elements of the tax deal agreed at the OECD level, in particular the first pillar, which redefines the place of taxability of companies.
In addition, the 2011 Late Payment Directive is to be revised. “It is simply not fair that 1 in 4 bankruptcies are due to invoices not being paid on,” von der Leyen said.
Von der Leyen wants to address the growing shortage of skilled workers by declaring 2023 the “European Year of Education and Training.” To make recruiting foreign employees easier, their qualifications should be recognized more quickly.

Industry representatives such as VDMA CEO Thilo Brodtmann are “positively surprised” by the unusual attention paid to SMEs. However, the relief package should “under no circumstances become a paper tiger.” The head of the DIHK representative in Brussels, Freya Lemcke, is skeptical: According to previous plans, the BEFIT initiative is aimed primarily at stock corporations and limited liability companies, but the vast majority of SMEs in Germany are run as partnerships. Therefore, “the majority of German SMEs would not be covered by these measures if the current plans were to be maintained.”

Digital policy: into the metaverse

Von der Leyen mentioned Europe’s digital transformation only in a few places. Only in her letter of intent to the President of Parliament and the Czech Council Presidency did the Commission President announce her intention to address new trends such as the metaverse.

Details of Europe’s plan to thrive in the metaverse came from Breton. He named three starting points:

People: In this new virtual world, European values would have to be anchored from the start. Breton stresses the importance of interoperable standards and that no private actor should hold the key to public space or set its terms.
Technology: Breton announces a Virtual and Augmented Reality Industrial Coalition, bringing together players in key metaverse technologies. He says there is already a roadmap supported by more than 40 EU organizations – from large companies to SMEs and universities.
Infrastructure: Breton states that the new virtual worlds will put even more pressure on connectivity infrastructure. At the same time, he says, the current economic climate is causing investment returns to stagnate and the cost of deploying lines to rise. Here, Breton points to his controversial plan to have big tech companies such as Google and Facebook share in infrastructure costs. vis

Foreign policy: power of democracies

In foreign policy, von der Leyen emphasized new features. The agenda must be geared more toward like-minded partners, she said. It was “time to invest in the power of democracies.” For example, the accession candidates in the Western Balkans, as well as Ukraine, Georgia and Moldova, are to receive more support. The EU decided in June to grant candidate status to Ukraine and Moldova. Von der Leyen is now also upgrading Georgia.

The German Head of the Commission also supports the initially controversial proposal by the French Head of State Emmanuel Macron for a “European Political Community.” It could include countries such as Ukraine, Great Britain, or Turkey – the Commission wants to present concrete proposals to the European Council. The Czech presidency has already convened the first summit on October 6 and 7 in Prague.

At the international level, the “Global Gateway” initiative, which the Commission conceived as an alternative to the Chinese Silk Road project, is to be expanded. Here, von der Leyen is seeking to close ranks with US President Joe Biden. She said that a joint summit would be convened to discuss concrete investment projects. She also wants to invite other G7 partners. A date was not given. Factories in Rwanda and Senegal, where modern mRNA vaccines are produced, serve as models. Similar projects are also planned in Latin America, she said. ebo

Rule of Law: defense pact for democracy

Von der Leyen announced a pact to defend democracy. The aim, she said, was to declare war on covert influence from outside the EU. Earlier this year, the University of Amsterdam closed down an allegedly independent institute that was actually paid for by China. The institute had spread that the reports of forced camps for Uyghurs were mere rumors.

But it is also about fighting corruption from within. Von der Leyen announced a revision of EU legislation against corruption for the coming year. In addition to the classic criminal offenses such as bribery and corruption, this would also include illegal enrichment, influence peddling and abuse of power. She will also propose to include corruption in the system of human rights sanctions, the new instrument for protecting EU values abroad.

Without mentioning names, von der Leyen also warned, “We will not allow any autocracy’s Trojan horses to attack our democracies from within.” On Twitter, the Green Daniel Freund gets specific: “Yes, Viktor Orbán, the sentence is for you.” mgr

EU reform: plea for a convention

The Commission President unexpectedly direct speaks out in favor of a convention to revise the EU treaties. The time had come for this. The European Parliament has spoken out in favor of it, and Chancellor Olaf Scholz is also open to the idea. Many member states, however, shy away from the lengthy process of amending the treaties. But they would have to agree by a majority to convene a convention; treaty reform even requires unanimity.

Von der Leyen is not very specific about reforms that would also be possible under the Lisbon Treaty. The Conference on the Future of Europe had developed numerous proposals. The citizens’ panels that proved their worth there should now become “an integral part of our democratic life,” she says. In what form, she does not say. tho

EU Commission also takes targets products from Xinjiang

By

Amelie Richter

After several delays, the EU Commission has presented its highly observed proposal for a ban on products from forced labor. In the future, forced labor products are to be banned from the European market without exception. According to the standards of the Commission’s proposal, products from the Chinese province of Xinjiang would soon have a hard time on the European market.

Unlike the US Uyghur Forced Labor Prevention Act (UFLPA), the EU proposal is a marketing ban, not a pure import ban. Furthermore, the bill is not aimed at a specific region or products like the US legislation. The burden of proof is also different. What both laws have in common, however, is that a verifiable suspicion of forced labor is sufficient to remove a product from the domestic market and ban its import and export.

“Our aim is to eliminate all products made with forced labor from the EU market, irrespective of where they have been made,” said EU Commissioner for Trade, Valdis Dombrovskis. The 27 member countries are responsible for implementing the ban. National customs or market surveillance authorities are to enforce the ban.

‘Risk-based approach’ with database

How is the ban supposed to work? The EU Commission refers to its proposal as a “risk-based approach“. In the first stage, authorities of EU member states are to identify forced labor risks. This will be based on information, for example, from civil society, NGOs or companies. This information will also feed into a risk factor database. For example, witness testimonies, NGO reports and other documents on human rights violations will be compiled there.

The suspicion that a particular product was manufactured with forced labor can be raised by various bodies. In a second phase, national authorities must then request further information from companies or conduct audits and inspections, including of suppliers. If a violation is identified, the product will have to be removed from the European domestic market within six weeks. If an investigation stalls because the company in question or even the country of production refuses to cooperate, the product can simply be blocked on suspicion. This is to prevent endless review loops and stalling tactics by the involved country.

Small and medium-sized enterprises (SMEs) also fall within the scope of the draft law. However, enforcement will likely focus on large companies. Aspects such as the scale of business activity and the volume of products affected are to be taken into account during the investigation. SMEs are also to receive special help for the audit of their supply chains.

Forced labor according to ILO definition difficult in China

What is considered forced labor in the first place will be determined based on the International Labor Organization (ILO). The United Nations organization has defined what is considered forced labor in Conventions 105 and 29.

And this is where a major problem for trade with China lies. The People’s Republic has signed and ratified both conventions (China.Table reported) – but the leadership in Beijing still refuses to acknowledge that forced labor exists in the country at all.

However, sufficient data should be available for the planned database for a risk-based suspicion approach. This way, the authorities do not have to prove forced labor individually down to the last detail to be able to ban products. There is sufficient documented evidence of forced labor in Xinjiang, not least the report by former UN Human Rights Commissioner Michelle Bachelet and verifiable witness statements by victims.

“Not every product can be checked 100 percent,” says Bernd Lange (Social Democratic Party), Chairman of the EU Parliament’s Committee on International Trade. But it can be identified, for example, that a product like Christmas tree ornaments largely comes from China’s Xinjiang province. In such cases, Lange says, “there will be changes in the value chains.” German companies in Xinjiang, including VW and BASF, would also have to take a close look at their supply chains.

Loophole for state-imposed forced labor

But there is one loophole in the EU proposal regarding China: In the case of forced labor in Xinjiang, the state is the executing force. It is not clearly stated how this should be dealt with. “The ambiguity of the Commission’s proposal on state-imposed forced labor is deeply concerning,” says Helene de Rengerve of the organization Anti-Slavery International. “The lack of clear procedures severely limits the power to force companies to remove state-imposed forced labor from their supply chains,” de Rengerve said.

The Commission’s proposal is also criticized because it does not provide for any compensation for victims of forced labor. Those affected cannot claim compensation. The fact that the ban applies to products but not to services is also a weak point of the draft legislation.

Differing opinions in EU Parliament

What happens next? First, the European Parliament and the Council of Member States must define their positions. That might take some time. The EU Commission’s proposal must now be analyzed and, if necessary, improved, wrote Trade Committee Chairman Lange on Twitter. It will likely take until early next year for MEPs to define their position for negotiations with the Commission and the EU Council. Conservative MEPs have already called for the bill to be shelved. CDU politician Daniel Caspary, for example, called for a general moratorium on EU laws “that hinder economic activity.”

The SPD MEP and Vice Chair of the Parliament’s China delegation, René Repasi, sees some potential in the ban: “I assume that this legal act will have a great impact.” It is highly doubtful that Beijing will simply accept it. “There will be a reaction,” Repasi believes. But China cannot afford to restrict trade with the EU, he adds. He does not expect major disruptions to trade chains, Repasi says. EU companies will have sufficient time to prepare: Once the EU institutions have agreed on a legislative proposal, it should take a full 24 months for the ban on forced labor products to take effect.

EU court confirms billion-dollar fine against Google

By

Corinna Visser

Once again, Google has suffered a defeat before the General Court of the European Union. The court largely upheld the Commission’s decision from 2018, according to which Google imposed unlawful restrictions on manufacturers of mobile devices with the Android operating system and mobile network operators in order to strengthen the dominant position of its search engine. However, the court found fault with some procedural errors and reduced the fine from €4.34 billion to €4.125 billion.

“This is an important decision that sets standards for the treatment of digital ecosystems,” commented Düsseldorf-based antitrust expert Rupert Podszun. “The court confirms that the major gatekeepers of the Internet are improperly exploiting their power.”

Google expressed disappointment that the court did not completely overturn the commission’s original decision. “Android has created more choices for everyone, not less,” a company spokesperson said. “And supports thousands of successful businesses in Europe and around the world,” Google can appeal the court’s decision.

Abuse of dominant position

There were essentially three points on which the Commission accused Google of abusing its dominant position:

Google had required manufacturers to pre-install the Google Search app and the browser app (Chrome) in order to obtain licensing for Google’s app store.
Google had made payments to certain major manufacturers and mobile network operators on the condition that they pre-install only the Google Search app on their devices.
Google had prevented manufacturers that wanted to preinstall Google apps from selling other smart mobile devices if they were based on a version of Android not approved by Google.

Google argued that the decision ignores that Android competes intensively with Apple’s iOS operating system for users and developers. Furthermore, manufacturers were free to pre-install competitors’ apps in addition to Google’s apps. Moreover, users could have easily downloaded competing apps. Finally, Google’s compatibility requirements for Android had also been misrepresented. The requirements are necessary to ensure that apps written for Android devices work on all of them.

Commission error

The decision does not come as a complete surprise; the court had already sided with the Commission in the first major Google case, commented antitrust lawyer Podszun. “Nevertheless, Competition Commissioner Margrethe Vestager can make good use of the decision – the Commission has recently been defeated in court several times.” He said the Commission keeps tripping up on the “as efficient competitor test” (AEC test). “That’s an economic test that many economists don’t even consider applying, but it’s used repeatedly in antitrust abuse proceedings. In the overall view, however, it is manageable in this decision,” Podszun said.

In fact, the Court of First Instance found several errors of reasoning in the assessment of essential variables of the AEC test carried out by the Commission, “namely, the estimate of the costs attributable to such a competitor, the assessment of its ability to achieve the pre-installation of its app, and the estimate of the revenue that can be obtained according to the age of the mobile devices in circulation”. It follows that the AEC test, as conducted by the Commission, is not capable of confirming the finding of abuse, so the Court upholds the corresponding plea. This was one of the reasons for the reduction of the fine.

Podszun also finds it interesting that the court explicitly recognizes arguments with behavioral economics aspects, “namely the status quo bias in favor of default settings.” However, “It’s always individual points that the competition authorities win here, but in the actual race, they’re just chasing the gatekeepers,” Podszun added. “That’s where the DMA may be a game-changer. “

He said the court’s decision strengthens the Commission’s hand in implementing the Digital Markets Act (DMA). “The court is signaling that it takes the dangers posed by digital ecosystems seriously. This is important, otherwise, the DMA would be quickly crushed by case law,” Podszun explained.

Parliamentarians and Consumer Association welcome the ruling

Andreas Schwab, EPP Group spokesman on internal market policy and rapporteur on the Digital Markets Act, welcomed the court’s decision, although this ruling comes many years too late. “It confirms the need to ban such market-damaging practices in the digital space through specific ex ante obligations,” Schwab said. He added that this was already confirmed last year by the Google Shopping ruling. With the Google Shopping and Android rulings and the entry into force of the DMA, “we can therefore definitely say: ‘Game over’ for unfair business practices!”.

Rasmus Andresen, the spokesman for the German Green Party and shadow rapporteur for the DMA in the Industry Committee, takes a similar view. He says the ruling strengthens EU competition law. “The big digital corporations, with their deep pockets and large legal departments, are usually very good at using lawsuits to postpone fines and show up the competition authorities,” Andresen said. He now expects something to change structurally and that “in the future, we will no longer have to deal with such protracted legal proceedings, but will implement the Digital Markets Act quickly.” In addition, he said, the EU Commission must submit a proposal to tighten up competition law in order to prevent abuse of market power from the outset or to put a stop to it more quickly.

European consumer association BEUC also welcomed the ruling, saying it confirms that European consumers must have a meaningful choice between search engines and browsers on their phones and tablets. “The court ruling makes it clear that Google cannot abuse its strong market position to unfairly exclude competitors through a complex and unlawful web of restrictions and requirements on phone manufacturers,” commented Monique Goyens, Director General of BEUC. “Google’s restrictions have harmed many millions of European consumers by depriving them of real choice and innovation for a decade.”

Energy market reform: proposals to yield €140 billion for member states

It was a clear message: “The current electricity market design – based on merit order – is not doing justice to consumers anymore,” said Ursula von der Leyen in her State of the Union address. That is why the Commission is seeking comprehensive reform of the electricity market to decouple the price of electricity from the dominant price of gas. The reform is to be implemented “early next year,” according to Energy Commissioner Kadri Simson. These measures have been announced:

A reduction in electricity demand at peak times. EU member states are to save ten percent of total electricity demand, although this target is not binding. Instead, a mandatory reduction of five percent during peak periods is earmarked. So far, member states have decided on voluntary commitments.
Capping the revenues of electricity generators that produce at low cost – i.e., renewables, nuclear, etc. The Commission proposes to set its revenue cap at €180 per megawatt hour. The introduction of the price cap is up to the member states.
The Commission also proposes a temporary solidarity contribution for oil, coal, and gas companies not covered by the other cap. Taxable profits 20 percent higher this year than the average of the previous three years will be taxed at an additional rate of 33 percent.
These two proposals are expected to generate about €140 billion for member states, €117 billion from the revenue cap, and €25 billion from the solidarity contribution.
The benchmark used in the gas market – the TTF – is to be replaced by a new, more representative standard.
The commission is also proposing to expand the energy price toolbox to help consumers. The proposals would allow regulated electricity prices below the cost of generation and extend regulated prices to small and medium enterprises.