Sticking points of the DMA + French EU P • Table.Briefings

Dear reader,

New Covid wave, new standard: the German federal and state governments agreed yesterday to link the decision on 2-G or 2-G plus to the so-called hospitalization incidence. Also, among the new resolutions are a partial vaccination requirement for medical and nursing workers who are in direct contact with vulnerable people, a higher booster shots rate, 3-G in the workplace and on public transportation, and an extension of fixed-cost assistance. “The situation is highly dramatic,” German Chancellor Angela Merkel said. The European Commission therefore also gave its green light yesterday for further state aid until mid-2022.

Emmanuel Macron has many ambitions for the French EU Council presidency, but will he have enough time? Many observers assume that the French presidential elections in April will de facto mean that France will only really be present in the Council of the EU for three of the six months of its presidency. Together with Tanja Kuchenbecker, I have analyzed which priorities from Paris harbor potential for conflict with other member states, what role the German coalition negotiations play in this, and on which legislative projects the “Grande Nation” could decisively push the European Union forward.

One of the European legislative projects that have a high priority for France is the “Digital Markets Act“. Platform regulation is moving forward in leaps and bounds, as the negotiating positions of the European Parliament and the Council are close to a final vote. Till Hoppe has taken a detailed look at the demands. In his analysis, he highlights lines of conflict between the two institutions and provides answers to the question: How effectively can the law be implemented at all?

Your
Jasmin Kohl

DMA: These are the sticking points

By

Till Hoppe

Almost in lockstep, the European Parliament and the Council are pushing ahead with the Digital Markets Act (DMA). Next Monday, members of the Internal Market Committee will vote on the recent compromise (Europe.Table reported exclusively). Then on Thursday, ministers will meet at the Competitiveness Council to decide on the general approach. If the plenary of the European Parliament gives the green light in December, the trialogue can begin. If everything goes as planned, the new rules could come into force at the beginning of 2023.

Who falls under the DMA

The Council closely follows the Commission’s proposal here: the authority should classify a digital company as a gatekeeper to be regulated if it has generated at least €6.5 billion in revenue in each of the past three years, had an average market capitalization of more than €65 billion in the previous year and had at least 45 million active users for its service (Article 3).

At the instigation of EPP rapporteur Andreas Schwab, Parliament will probably set the threshold higher: at an €8 billion turnover and an €80 billion market value. However, the focus on very large digital corporations including their ecosystems, something he called for, is absent from the compromise. This means that European companies are also likely to fall under the DMA, in particular, the hotel broker Booking.com.

Both institutions want to define search engines, social networks, messengers, and cloud computing services, among others, as core platform services and thus include them in the scope. The Parliament also wants to add web browsers, virtual assistants, and connected TV to the list in Article 2.

Which specifications gatekeepers have to follow

The Council position provides 20 specific precepts and prohibitions that gatekeepers must comply with in their business operations (Articles 5 and 6). Member states again closely follow the Commission’s proposal, adding only one requirement that companies must not make it difficult for customers to withdraw from their platform.

No less than six provisions target the handling of data, the most important basis for most business models. According to Article 6.1a, a gatekeeper may not use any non-public information from competitors who are active on its platform. This is aimed, for example, at Amazon’s handling of the data of smaller merchants who reach end customers via the group’s marketplace. In addition, the gatekeepers are supposed to grant business customers access to their data, such as that generated by search engines.

Article 5a is aimed at private users: it prohibits companies from combining personal data from one of their services with information from other sources. According to the compromise reached on Wednesday, the European Parliament would go one step further and restrict the merging of personal data for advertising purposes in Article 6a.

However, like the General Data Protection Regulation (GDPR), both articles provide for exceptions – in particular with user consent. In its current form, Article 5a will change little in practice, says Rupprecht Podszun, professor of antitrust law at Heinrich Heine University in Düsseldorf: “The gatekeepers extract consent from users or invoke the exceptions in the GDPR”. What is effective is either a ban on data pooling or the involvement of specialized data guides who control the data management for the users.

Article 6.1c is particularly sensitive for Apple: This aims to open up the closed world of its operating system and app store. According to it, the company could be obliged to allow the users of its devices to also enable apps from other sources than the in-house app store.

The parliamentary draft also explicitly mentions the right of other providers to offer their services to customers there at different conditions than in the App Store and also to process payment outside of it. Apple has so far prohibited both in its terms and conditions, which has triggered lawsuits from companies like Spotify and Epic Games.

However, the Council, in particular, has reacted to Apple CEO Tim Cook’s criticism of so-called sideloading: According to this, gatekeepers are allowed to take precautions to ensure that the third-party applications do not compromise the integrity of the operating system “to the extent that such measures are necessary and proportionate”. According to the parliamentary draft, a gatekeeper must “demonstrate that such access undermines the privacy and cybersecurity of users”.

How the specifications are to be implemented

The Commission is counting on enforcement of the DMA to be far less burdensome and time-consuming than classic abuse procedures under Article 102 of the Treaty on the Functioning of the European Union. The rules should be as “precise as possible so that they are self-executing”, Olivier Guersent, Director-General of DG Competition, said at a conference on Thursday. Clear rules would be easier for companies to follow, and the necessary pressure would be provided by the far-reaching sanction options in the event of violations – up to and including structural measures such as the spin-off of business units (Article 16).

In particular, the conduct requirements in Article 5 are to be formulated in such a way that they leave hardly any room for interpretation. For the obligations in Article 6, on the other hand, the possibility of a regulatory dialogue between companies and the Commission is conceived. This should also allow the necessary flexibility to prevent specifications from becoming outdated too quickly, given the rapid changes in the digital economy. Article 10 does give the Commission the option of supplementing the provisions of Articles 5 and 6 using a delegated act. However, the Council wants to significantly restrict the Commission’s room for maneuver. New obligations may only be passed through proper legislative processes.

How to ensure a balance between clear rules and necessary flexibility will be one of the main topics in the upcoming trialogue, Guersent said. Podszun argues that there is room for interpretation and uncertainty in every law. “The question is rather: How much energy do the powerful gatekeepers spend on torpedoing the application and to what extent are they willing to make serious compliance efforts?”

Who is responsible for enforcement

Fiona Scott Morton, a professor at Yale University, remains skeptical: Big tech companies would have “every incentive to bypass the rules”. In such cases, the Commission should be able to open an investigation, according to the DMA. National antitrust authorities can also take action in their respective countries. This was particularly important to the German government. However, the Federal Cartel Office and Co should then forward the proceedings to the Commission from a certain point in time. The Council position also assigns the Commission the role of “sole enforcer of this regulation” (Article 32a). This is intended to ensure uniform application of the DMA within the EU.

In the Commission, 80 posts are to be created for this purpose, presumably mainly for experts from the Directorate-General for Competition. It has yet to be determined which commissioner the department will report to. But Podszun and other experts fear that staffing will be inadequate. “I have doubts that the commission can essentially do the tasks alone,” he says. Therefore, an even stronger involvement of national authorities would be a viable option

France’s Council Presidency: Many goals, little time

When France takes over the EU Council presidency for six months in January, President Emmanuel Macron will have two closely linked concerns. He wants to strengthen Europe – and his position. Because in April there are presidential elections in France. It is considered certain that Macron wants to run a second time, although he has not yet officially declared his candidacy. But it is already clear that Europe is an important campaign issue. Macron is therefore dependent on success. He hopes to polish up his image as a great statesman.

In a televised address on 9 November, the President addressed the French. He listed the challenges for the Presidency: Europe’s external borders must be better protected, and relations with Africa must continue to be stabilized. The digital giants should be tamed. A credible reduction in CO2 emissions must also be achieved. To this end, Macron wants to push ahead with the planned CO2 border adjustment.

Macron has very similar goals for Europe and France: For France, he had announced an investment plan of 30 billion euros by 2030. He also wants to invest in technological sovereignty in Europe. Specifically, his intentions are directed towards several goals: Zero-emission aircraft, electric cars, space travel, robots, semiconductors, and the EU’s digital future.

Macron has been arguing for years that the EU must become more independent. Also in its dealings with the US – politically, militarily, and economically. That’s why the topic of European security and defense policy will also be important during the Council Presidency. It is to be discussed at a specially organized summit. At the most recent Council meeting of EU foreign ministers, it also became clear that France wants to push ahead with the “Strategic Compass” and adopt it in March 2022. According to EU diplomats, the French Council Presidency could significantly advance European security and defense policy.

“Too many priorities kill priorities”

Given the multiplicity of objectives, however, there is a risk that the results will fall short of one’s expectations. “Too many priorities kill priorities,” says Sébastien Maillard, director of the Jacques Delors Institute. EU diplomats in Brussels take a similar view: each Council presidency must coordinate its priorities with the capital, but also in the so-called trio, i.e. with the subsequent Council presidencies (the Czech Republic and Sweden).

The French Council Presidency is now made even more difficult by the parallel presidential election in April, which automatically shifts the focus to domestic issues. To achieve something, the presidency should therefore concentrate on two or three issues, an EU diplomat recommends. That would also be important for the trialogue negotiations.

Brussels says that realistically France only has the first three months for the Council presidency anyway. From April onwards everything will be dominated by the presidential elections. An EU diplomat sums it up this way: “Everything the French will do at the European level will be determined by national events“.

The motto of the French Presidency of the Council of the European Union has long been clear: “Recovery, Strength, Belonging”. Secretary of State for the European Union Clément Beaune organized preparatory bodies months ago. French MPs, senators, and EU parliamentarians are meeting to jointly shape the goals. At the “European Business Summit” on Wednesday, Beaune named three topics on which the French Council Presidency wants to achieve concrete results: the border adjustment mechanism CBAM, platform regulation (Digital Services Act, Digital Markets Act), and the directive on minimum wages.

The last topic, in particular, contains potential for conflict. The Commission presented the draft legislation at the end of October 2020, but the discussion in the Council has stalled because several member states prefer a recommendation instead of a directive in this area. Other contentious issues are also emerging: on the one hand, in climate policy, and on the other, in financial policy.

Nuclear energy is a conflict issue

France is trying to have nuclear energy declared a green investment and is mobilizing more and more member states for its project. Germany, Luxembourg, and Austria are among the biggest opponents of nuclear power. Macron had also announced that he wanted to build small reactors in France to reduce CO2 emissions. Internal Market Commissioner Thierry Breton has also already made it clear which side he is on: “There will be no Green Deal without nuclear energy. Anyone who thinks otherwise is thinking wrong.”

In member states that oppose the inclusion of nuclear power in the taxonomy, this development is viewed critically. However, some observers consider it unlikely that the French Council Presidency will be able to enforce this, as the ball is now in the Commission‘s court.

Should the Commission present a delegated act to include nuclear taxonomy, it would need a qualified majority to stop it. This does not currently exist, as still-Chancellor Angela Merkel has stated. If nuclear energy is indeed included in the taxonomy, it would be a sign for the financial markets to invest in nuclear plants. Macron is also fighting for the green EU climate label because it makes it easier to finance projects in France.

Coalition negotiations hamper setting of priorities

The coalition negotiations in Germany are complicating the preparations in Paris. Macron has partners in the Greens and the SPD who could support a reform of the European Stability and Growth Pact. So far, however, the prospective chancellor Olaf Scholz has expressed restraint – he says the previous rules have proven their flexibility. The FDP is critical of a relaxation of the rules and is also firmly opposed to a relaunch of the debt-financed reconstruction instrument.

“You have to reach a Franco-German compromise before you can move forward with the revision of the rules in the Stability Pact,” stresses Clément Beaune. Finance Minister Bruno Le Maire already conveyed his position via interview on Tuesday: He called the 60 percent limit on public debt “obsolete” and also put the three percent target on the budget deficit up for discussion. Before the new rules are defined, France wants to hold a “very in-depth debate on the political goals”, Le Maire said.

Officially, the reform is not yet on the agenda of the French presidency. “At least not yet,” writes Le Monde. Because the subject is highly sensitive. Many other member states, above all the so-called frugal four (Austria, the Netherlands, Finland, and Denmark), are also paying close attention to budget discipline and are against relaxing the rules.

How much leeway France has on the issue also depends on Germany’s future finance minister, Le Monde comments. Depending on whether his name is Robert Habeck or Christian Lindner, the negotiations won’t be the same for Paris. Tanja Kuchenbecker / Jasmin Kohl

ECJ Advocate General: German data retention not legal

One of the Advocates General at the European Court of Justice (ECJ), Campos Sánchez-Bordona, has interpreted previous ECJ advantages in his assessment in such a way that data retention would only be permitted in the event of a serious threat to national security. Even the temporary storage of a large amount of connection data, as provided for in Germany, would already interfere too much with fundamental rights and private life. The Advocate General’s opinion is the last procedural step before a ruling in which the ECJ confirms or rejects the German regulation. Deutsche Telekom and internet provider SpaceNet are fighting back against the regulations in the German Telecommunications Act. The law, which has been suspended since 2017 pending clarification under European law, obliges internet providers and telephone providers to store certain data for access by authorities.

Sánchez-Bordona expressed surprise that several EU Member States, including France and Ireland, continue to call for data retention despite the clear court rulings, as the ECJ had already explained its position in detail. Advocate General Sánchez-Bordona’s assessment is not binding, but will serve as guidance for the ECJ judges. A judgment will not be handed down for several months.

In the past, the FDP and the Greens as well as parts of the SPD had clearly spoken out against the retention of connection and location data. It is considered certain that a new edition with a traffic light coalition will not come about if the ECJ rejects the old regulation on grounds of principle. koj

EU competition rules: No more subsidies for fossil fuels

The European Commission has announced that in the future it will no longer approve state aid for fossil fuel projects. This is part of a revision of EU competition rules to make them more climate-friendly. Investments in gas projects are exempt. However, member states will have to show how they ensure that such investments are compatible with EU climate goals. This means that state financing of gas projects must not prevent more far-reaching emission reductions – for example by switching to renewables.

The Commission, which oversees the competition policies of EU countries, scrutinizes state aid granted by national governments to ensure that it complies with the competition rules of the EU’s single market. The overhaul of EU state aid rules also seeks to bring them in line with the EU’s climate change policy. The new rules would “support the phase-out of fossil fuels”, the Commission wrote in a communication published on Thursday.

State support for projects involving such fuels, especially the most polluting ones such as oil, coal, and lignite, is “unlikely to be compatible with state aid rules,” the commission said. The gradual phase-out of coal-fired power generation is seen as crucial to meeting EU targets for cutting greenhouse gas emissions. luk with rtr

Corona state aid possible until mid-2022

German federal and state governments are planning economic aid for Advent and Christmas markets, which are likely to be particularly hard hit by Corona protection measures in the coming weeks. This emerges from the resolutions of the federal and state governments on the current Corona situation, which were published on Thursday evening. Plans also call for fixed-cost assistance for businesses and the self-employed to be extended by three months until the end of March 2022. The same applies to the regulations on short-time work, which many companies have used during the Corona crisis.

“Alongside short-time allowance, bridging assistance is the most important instrument for helping companies particularly affected by the pandemic,” the resolutions state. For affected companies in the trade sector, there is still the possibility of receiving funds for non-saleable seasonal goods within the framework of the bridging aid.

If necessary, companies in Germany could receive further state aid until mid-2022. The EU Commission, which is supposed to prevent distortions of competition in Europe through state aid, gave the green light for this on Thursday. Since the beginning of the crisis, around 125 billion euros have already been paid out to the economy. Added to this was the short-time working allowance of 40 billion euros.

Economics Minister Peter Altmaier (CDU) spoke of an important step. “The pandemic situation is unfortunately very serious again in many European countries. Therefore, it is right that the European Commission grants flexibility to the Member States.” The economic recovery of the past months must not be jeopardized, he added. rtr

ECB does not want to rush into the digital euro

The European Central Bank (ECB) will approach the project of a digital euro with great caution, according to its director Fabio Panetta. The stakes are high and the central bank is entering uncharted territory, the Italian stressed to a European Parliament committee on Thursday: “We want to move quickly, but we must not rush things.” He said a high-level task force was working to narrow down use cases and design-related decisions by early 2023. A prototype should be ready in the following months. The aim is not yet to “press the button”, but to prepare a decision on digital money.

According to Panetta, the EU Parliament has a key role to play, as the EU legal framework may have to be amended. However, a digital euro would not mean the end of notes and coins: “As long as people want to have cash, we will provide it,” Panetta assured. At the same time, however, the ECB must ensure that central bank money can continue to be used without restriction if payment behavior changes: “And this is precisely where our work on the digital euro comes in: It would allow people to still use central bank money as a medium of exchange in the digital age.”

To find out what users wanted, he said, the ECB would engage intensively with the public, retailers, and other stakeholders during the investigation phase. Many central banks are currently looking into introducing digital versions of their currencies. China is among the pioneers. In a welcoming speech at Euro Finance Week, Bundesbank Executive Board member Burkhard Balz warned that despite all the advantages of innovations, their risks should always be taken into account: “Not everything that is new is always better.” He added that it was important to weigh up the potential benefits and risks, especially when it came to technological innovations: “And so, as central banks, we are also engaged in an intensive exchange about the pros and cons of digital money”.

BIS calls on central banks to act

One problem repeatedly mentioned in this context is that bank customers could clear out their accounts in times of crisis because they consider digital central bank money to be safer in such times. To prevent this, many central banks are considering imposing caps to prevent the hoarding of digital money holdings. The Bank for International Settlements (BIS) has called on central banks to press ahead with their work on digital currencies. Otherwise, they risk being left behind by the digital initiatives of large technology groups such as Facebook. rtr

Commission: stock exchanges to provide price data for EU-wide register

According to an EU draft, stock exchanges in the EU are to provide data on trading transactions for a Europe-wide comparison register in the future. Such a system, called “Consolidated Tape”, should, among other things, enable investors to identify the most favorable deals for them and generally lead to more transparency in stock exchange trading, as emerges from a draft paper seen by Reuters on Thursday. Trade data is to be collected on this system across Europe. The proposal is part of a package of reforms expected next week by the EU Commission to strengthen capital markets in the EU after Brexit.

Banks, asset managers, and other investors have so far had no clear means of comparison when the same security is traded on different venues across the EU. According to the document, stock exchanges would be obliged to contribute to an EU-wide register for shares and bonds in return for the appropriate remuneration. All sources of market data would have to make standardized core data available to collection points, the document said. Exchanges would be guaranteed minimum revenues for providing price data.

The topic also plays an important role in the discussion about controversial remuneration systems at online brokers – so-called payment for order flow (PFOF). In this practice, customer orders are brokered to specific trading venues and the brokers receive remuneration for this. One of the criticisms of the PFOF model is that orders may go where brokers are guaranteed the highest payments, rather than where there are the best prices for customers. The creation of a “consolidated tape” would possibly lead to more transparency and comparability. rtr

30 years of the Weimar Triangle: between aspiration and reality

David Gregosz

For years, the Weimar Triangle has been struggling with insignificance. The enormous potential of the three states, which together account for about 45 percent of the EU’s gross domestic product and nearly 40 percent of its population, and which also form a geographic axis between Western and Eastern Europe, contrasts with a depressing reality.

The last joint meeting of foreign ministers indeed took place only in October 2020, at which the will to intensify relations was emphasized. All too often, however, such statements turned out to be empty phrases from which no concrete efforts emerged. The trilateral relationship is marked by profound disagreements and differences.

Franco-German relations are largely exempt from this, as the two states only reaffirmed their special relationship with the Treaty of Aachen in 2019. Tensions, on the other hand, are particularly prevalent in the two countries’ ties with Poland. The decisive factor here is the coalition led by the PiS party that has been in power since 2015.

Tensions caused by judicial reform

First and foremost, the controversial judicial reform has for years been a source of contention with European partners, who see the lasting rule of law at risk and, not least, brought about the first Article 7 process against. Discrepancies also exist over the new media law, which opponents criticized as an attack on freedom of opinion and freedom of the press. The German-Russian cooperation on the Nord Stream 2 gas pipeline is also causing unease in Warsaw.

Despite all the differences at the national level, regional and local relations have proven to be an anchor of stability. For example, partnerships exist between North Rhine-Westphalia, Silesia, and Hauts-de-France, as well as between Brandenburg, Mazowieckie, and the Île-de-France. These “regional Weimar triangles” have the advantage of maintaining relations relatively independently of national tensions.

Civil society cooperation

In addition, bilateral cooperation in the form of Eurodistricts and Euroregions has been consolidated in the border regions. In addition, there are town twinning schemes, university cooperation, and youth organizations that promote intercultural exchange. This civil society level and its positive effects should not be forgotten when evaluating the triangle, even if they cannot replace exchanges at the national level.

For (long-term) cooperation to appear possible at all, however, there would need to be a congruent idea within the trio about the goals and function of the triangle as the basis of any cooperation. Institutionalizing the loose alliance would also be a way of expanding relations, but due to current and historical developments, it appears to be a mere thought experiment.

To consign the Weimar Triangle to the history books as a closed chapter because of the problems described above would certainly be the wrong approach. But as desirable as intensive trilateral cooperation at the national level may seem, there is currently not much to be said for its renaissance.

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,

New Covid wave, new standard: the German federal and state governments agreed yesterday to link the decision on 2-G or 2-G plus to the so-called hospitalization incidence. Also, among the new resolutions are a partial vaccination requirement for medical and nursing workers who are in direct contact with vulnerable people, a higher booster shots rate, 3-G in the workplace and on public transportation, and an extension of fixed-cost assistance. “The situation is highly dramatic,” German Chancellor Angela Merkel said. The European Commission therefore also gave its green light yesterday for further state aid until mid-2022.

Emmanuel Macron has many ambitions for the French EU Council presidency, but will he have enough time? Many observers assume that the French presidential elections in April will de facto mean that France will only really be present in the Council of the EU for three of the six months of its presidency. Together with Tanja Kuchenbecker, I have analyzed which priorities from Paris harbor potential for conflict with other member states, what role the German coalition negotiations play in this, and on which legislative projects the “Grande Nation” could decisively push the European Union forward.

One of the European legislative projects that have a high priority for France is the “Digital Markets Act“. Platform regulation is moving forward in leaps and bounds, as the negotiating positions of the European Parliament and the Council are close to a final vote. Till Hoppe has taken a detailed look at the demands. In his analysis, he highlights lines of conflict between the two institutions and provides answers to the question: How effectively can the law be implemented at all?

Your
Jasmin Kohl

DMA: These are the sticking points

By

Till Hoppe

Almost in lockstep, the European Parliament and the Council are pushing ahead with the Digital Markets Act (DMA). Next Monday, members of the Internal Market Committee will vote on the recent compromise (Europe.Table reported exclusively). Then on Thursday, ministers will meet at the Competitiveness Council to decide on the general approach. If the plenary of the European Parliament gives the green light in December, the trialogue can begin. If everything goes as planned, the new rules could come into force at the beginning of 2023.

Who falls under the DMA

The Council closely follows the Commission’s proposal here: the authority should classify a digital company as a gatekeeper to be regulated if it has generated at least €6.5 billion in revenue in each of the past three years, had an average market capitalization of more than €65 billion in the previous year and had at least 45 million active users for its service (Article 3).

At the instigation of EPP rapporteur Andreas Schwab, Parliament will probably set the threshold higher: at an €8 billion turnover and an €80 billion market value. However, the focus on very large digital corporations including their ecosystems, something he called for, is absent from the compromise. This means that European companies are also likely to fall under the DMA, in particular, the hotel broker Booking.com.

Both institutions want to define search engines, social networks, messengers, and cloud computing services, among others, as core platform services and thus include them in the scope. The Parliament also wants to add web browsers, virtual assistants, and connected TV to the list in Article 2.

Which specifications gatekeepers have to follow

The Council position provides 20 specific precepts and prohibitions that gatekeepers must comply with in their business operations (Articles 5 and 6). Member states again closely follow the Commission’s proposal, adding only one requirement that companies must not make it difficult for customers to withdraw from their platform.

No less than six provisions target the handling of data, the most important basis for most business models. According to Article 6.1a, a gatekeeper may not use any non-public information from competitors who are active on its platform. This is aimed, for example, at Amazon’s handling of the data of smaller merchants who reach end customers via the group’s marketplace. In addition, the gatekeepers are supposed to grant business customers access to their data, such as that generated by search engines.

Article 5a is aimed at private users: it prohibits companies from combining personal data from one of their services with information from other sources. According to the compromise reached on Wednesday, the European Parliament would go one step further and restrict the merging of personal data for advertising purposes in Article 6a.

However, like the General Data Protection Regulation (GDPR), both articles provide for exceptions – in particular with user consent. In its current form, Article 5a will change little in practice, says Rupprecht Podszun, professor of antitrust law at Heinrich Heine University in Düsseldorf: “The gatekeepers extract consent from users or invoke the exceptions in the GDPR”. What is effective is either a ban on data pooling or the involvement of specialized data guides who control the data management for the users.

Article 6.1c is particularly sensitive for Apple: This aims to open up the closed world of its operating system and app store. According to it, the company could be obliged to allow the users of its devices to also enable apps from other sources than the in-house app store.

The parliamentary draft also explicitly mentions the right of other providers to offer their services to customers there at different conditions than in the App Store and also to process payment outside of it. Apple has so far prohibited both in its terms and conditions, which has triggered lawsuits from companies like Spotify and Epic Games.

However, the Council, in particular, has reacted to Apple CEO Tim Cook’s criticism of so-called sideloading: According to this, gatekeepers are allowed to take precautions to ensure that the third-party applications do not compromise the integrity of the operating system “to the extent that such measures are necessary and proportionate”. According to the parliamentary draft, a gatekeeper must “demonstrate that such access undermines the privacy and cybersecurity of users”.

How the specifications are to be implemented

The Commission is counting on enforcement of the DMA to be far less burdensome and time-consuming than classic abuse procedures under Article 102 of the Treaty on the Functioning of the European Union. The rules should be as “precise as possible so that they are self-executing”, Olivier Guersent, Director-General of DG Competition, said at a conference on Thursday. Clear rules would be easier for companies to follow, and the necessary pressure would be provided by the far-reaching sanction options in the event of violations – up to and including structural measures such as the spin-off of business units (Article 16).

In particular, the conduct requirements in Article 5 are to be formulated in such a way that they leave hardly any room for interpretation. For the obligations in Article 6, on the other hand, the possibility of a regulatory dialogue between companies and the Commission is conceived. This should also allow the necessary flexibility to prevent specifications from becoming outdated too quickly, given the rapid changes in the digital economy. Article 10 does give the Commission the option of supplementing the provisions of Articles 5 and 6 using a delegated act. However, the Council wants to significantly restrict the Commission’s room for maneuver. New obligations may only be passed through proper legislative processes.

How to ensure a balance between clear rules and necessary flexibility will be one of the main topics in the upcoming trialogue, Guersent said. Podszun argues that there is room for interpretation and uncertainty in every law. “The question is rather: How much energy do the powerful gatekeepers spend on torpedoing the application and to what extent are they willing to make serious compliance efforts?”

Who is responsible for enforcement

Fiona Scott Morton, a professor at Yale University, remains skeptical: Big tech companies would have “every incentive to bypass the rules”. In such cases, the Commission should be able to open an investigation, according to the DMA. National antitrust authorities can also take action in their respective countries. This was particularly important to the German government. However, the Federal Cartel Office and Co should then forward the proceedings to the Commission from a certain point in time. The Council position also assigns the Commission the role of “sole enforcer of this regulation” (Article 32a). This is intended to ensure uniform application of the DMA within the EU.

In the Commission, 80 posts are to be created for this purpose, presumably mainly for experts from the Directorate-General for Competition. It has yet to be determined which commissioner the department will report to. But Podszun and other experts fear that staffing will be inadequate. “I have doubts that the commission can essentially do the tasks alone,” he says. Therefore, an even stronger involvement of national authorities would be a viable option

France’s Council Presidency: Many goals, little time

When France takes over the EU Council presidency for six months in January, President Emmanuel Macron will have two closely linked concerns. He wants to strengthen Europe – and his position. Because in April there are presidential elections in France. It is considered certain that Macron wants to run a second time, although he has not yet officially declared his candidacy. But it is already clear that Europe is an important campaign issue. Macron is therefore dependent on success. He hopes to polish up his image as a great statesman.

In a televised address on 9 November, the President addressed the French. He listed the challenges for the Presidency: Europe’s external borders must be better protected, and relations with Africa must continue to be stabilized. The digital giants should be tamed. A credible reduction in CO2 emissions must also be achieved. To this end, Macron wants to push ahead with the planned CO2 border adjustment.

Macron has very similar goals for Europe and France: For France, he had announced an investment plan of 30 billion euros by 2030. He also wants to invest in technological sovereignty in Europe. Specifically, his intentions are directed towards several goals: Zero-emission aircraft, electric cars, space travel, robots, semiconductors, and the EU’s digital future.

Macron has been arguing for years that the EU must become more independent. Also in its dealings with the US – politically, militarily, and economically. That’s why the topic of European security and defense policy will also be important during the Council Presidency. It is to be discussed at a specially organized summit. At the most recent Council meeting of EU foreign ministers, it also became clear that France wants to push ahead with the “Strategic Compass” and adopt it in March 2022. According to EU diplomats, the French Council Presidency could significantly advance European security and defense policy.

“Too many priorities kill priorities”

Given the multiplicity of objectives, however, there is a risk that the results will fall short of one’s expectations. “Too many priorities kill priorities,” says Sébastien Maillard, director of the Jacques Delors Institute. EU diplomats in Brussels take a similar view: each Council presidency must coordinate its priorities with the capital, but also in the so-called trio, i.e. with the subsequent Council presidencies (the Czech Republic and Sweden).

The French Council Presidency is now made even more difficult by the parallel presidential election in April, which automatically shifts the focus to domestic issues. To achieve something, the presidency should therefore concentrate on two or three issues, an EU diplomat recommends. That would also be important for the trialogue negotiations.

Brussels says that realistically France only has the first three months for the Council presidency anyway. From April onwards everything will be dominated by the presidential elections. An EU diplomat sums it up this way: “Everything the French will do at the European level will be determined by national events“.

The motto of the French Presidency of the Council of the European Union has long been clear: “Recovery, Strength, Belonging”. Secretary of State for the European Union Clément Beaune organized preparatory bodies months ago. French MPs, senators, and EU parliamentarians are meeting to jointly shape the goals. At the “European Business Summit” on Wednesday, Beaune named three topics on which the French Council Presidency wants to achieve concrete results: the border adjustment mechanism CBAM, platform regulation (Digital Services Act, Digital Markets Act), and the directive on minimum wages.

The last topic, in particular, contains potential for conflict. The Commission presented the draft legislation at the end of October 2020, but the discussion in the Council has stalled because several member states prefer a recommendation instead of a directive in this area. Other contentious issues are also emerging: on the one hand, in climate policy, and on the other, in financial policy.

Nuclear energy is a conflict issue

France is trying to have nuclear energy declared a green investment and is mobilizing more and more member states for its project. Germany, Luxembourg, and Austria are among the biggest opponents of nuclear power. Macron had also announced that he wanted to build small reactors in France to reduce CO2 emissions. Internal Market Commissioner Thierry Breton has also already made it clear which side he is on: “There will be no Green Deal without nuclear energy. Anyone who thinks otherwise is thinking wrong.”

In member states that oppose the inclusion of nuclear power in the taxonomy, this development is viewed critically. However, some observers consider it unlikely that the French Council Presidency will be able to enforce this, as the ball is now in the Commission‘s court.

Should the Commission present a delegated act to include nuclear taxonomy, it would need a qualified majority to stop it. This does not currently exist, as still-Chancellor Angela Merkel has stated. If nuclear energy is indeed included in the taxonomy, it would be a sign for the financial markets to invest in nuclear plants. Macron is also fighting for the green EU climate label because it makes it easier to finance projects in France.

Coalition negotiations hamper setting of priorities

The coalition negotiations in Germany are complicating the preparations in Paris. Macron has partners in the Greens and the SPD who could support a reform of the European Stability and Growth Pact. So far, however, the prospective chancellor Olaf Scholz has expressed restraint – he says the previous rules have proven their flexibility. The FDP is critical of a relaxation of the rules and is also firmly opposed to a relaunch of the debt-financed reconstruction instrument.

“You have to reach a Franco-German compromise before you can move forward with the revision of the rules in the Stability Pact,” stresses Clément Beaune. Finance Minister Bruno Le Maire already conveyed his position via interview on Tuesday: He called the 60 percent limit on public debt “obsolete” and also put the three percent target on the budget deficit up for discussion. Before the new rules are defined, France wants to hold a “very in-depth debate on the political goals”, Le Maire said.

Officially, the reform is not yet on the agenda of the French presidency. “At least not yet,” writes Le Monde. Because the subject is highly sensitive. Many other member states, above all the so-called frugal four (Austria, the Netherlands, Finland, and Denmark), are also paying close attention to budget discipline and are against relaxing the rules.

How much leeway France has on the issue also depends on Germany’s future finance minister, Le Monde comments. Depending on whether his name is Robert Habeck or Christian Lindner, the negotiations won’t be the same for Paris. Tanja Kuchenbecker / Jasmin Kohl

ECJ Advocate General: German data retention not legal

One of the Advocates General at the European Court of Justice (ECJ), Campos Sánchez-Bordona, has interpreted previous ECJ advantages in his assessment in such a way that data retention would only be permitted in the event of a serious threat to national security. Even the temporary storage of a large amount of connection data, as provided for in Germany, would already interfere too much with fundamental rights and private life. The Advocate General’s opinion is the last procedural step before a ruling in which the ECJ confirms or rejects the German regulation. Deutsche Telekom and internet provider SpaceNet are fighting back against the regulations in the German Telecommunications Act. The law, which has been suspended since 2017 pending clarification under European law, obliges internet providers and telephone providers to store certain data for access by authorities.

Sánchez-Bordona expressed surprise that several EU Member States, including France and Ireland, continue to call for data retention despite the clear court rulings, as the ECJ had already explained its position in detail. Advocate General Sánchez-Bordona’s assessment is not binding, but will serve as guidance for the ECJ judges. A judgment will not be handed down for several months.

In the past, the FDP and the Greens as well as parts of the SPD had clearly spoken out against the retention of connection and location data. It is considered certain that a new edition with a traffic light coalition will not come about if the ECJ rejects the old regulation on grounds of principle. koj

EU competition rules: No more subsidies for fossil fuels

The European Commission has announced that in the future it will no longer approve state aid for fossil fuel projects. This is part of a revision of EU competition rules to make them more climate-friendly. Investments in gas projects are exempt. However, member states will have to show how they ensure that such investments are compatible with EU climate goals. This means that state financing of gas projects must not prevent more far-reaching emission reductions – for example by switching to renewables.

The Commission, which oversees the competition policies of EU countries, scrutinizes state aid granted by national governments to ensure that it complies with the competition rules of the EU’s single market. The overhaul of EU state aid rules also seeks to bring them in line with the EU’s climate change policy. The new rules would “support the phase-out of fossil fuels”, the Commission wrote in a communication published on Thursday.

State support for projects involving such fuels, especially the most polluting ones such as oil, coal, and lignite, is “unlikely to be compatible with state aid rules,” the commission said. The gradual phase-out of coal-fired power generation is seen as crucial to meeting EU targets for cutting greenhouse gas emissions. luk with rtr

Corona state aid possible until mid-2022

German federal and state governments are planning economic aid for Advent and Christmas markets, which are likely to be particularly hard hit by Corona protection measures in the coming weeks. This emerges from the resolutions of the federal and state governments on the current Corona situation, which were published on Thursday evening. Plans also call for fixed-cost assistance for businesses and the self-employed to be extended by three months until the end of March 2022. The same applies to the regulations on short-time work, which many companies have used during the Corona crisis.

“Alongside short-time allowance, bridging assistance is the most important instrument for helping companies particularly affected by the pandemic,” the resolutions state. For affected companies in the trade sector, there is still the possibility of receiving funds for non-saleable seasonal goods within the framework of the bridging aid.

If necessary, companies in Germany could receive further state aid until mid-2022. The EU Commission, which is supposed to prevent distortions of competition in Europe through state aid, gave the green light for this on Thursday. Since the beginning of the crisis, around 125 billion euros have already been paid out to the economy. Added to this was the short-time working allowance of 40 billion euros.

Economics Minister Peter Altmaier (CDU) spoke of an important step. “The pandemic situation is unfortunately very serious again in many European countries. Therefore, it is right that the European Commission grants flexibility to the Member States.” The economic recovery of the past months must not be jeopardized, he added. rtr

ECB does not want to rush into the digital euro

The European Central Bank (ECB) will approach the project of a digital euro with great caution, according to its director Fabio Panetta. The stakes are high and the central bank is entering uncharted territory, the Italian stressed to a European Parliament committee on Thursday: “We want to move quickly, but we must not rush things.” He said a high-level task force was working to narrow down use cases and design-related decisions by early 2023. A prototype should be ready in the following months. The aim is not yet to “press the button”, but to prepare a decision on digital money.

According to Panetta, the EU Parliament has a key role to play, as the EU legal framework may have to be amended. However, a digital euro would not mean the end of notes and coins: “As long as people want to have cash, we will provide it,” Panetta assured. At the same time, however, the ECB must ensure that central bank money can continue to be used without restriction if payment behavior changes: “And this is precisely where our work on the digital euro comes in: It would allow people to still use central bank money as a medium of exchange in the digital age.”

To find out what users wanted, he said, the ECB would engage intensively with the public, retailers, and other stakeholders during the investigation phase. Many central banks are currently looking into introducing digital versions of their currencies. China is among the pioneers. In a welcoming speech at Euro Finance Week, Bundesbank Executive Board member Burkhard Balz warned that despite all the advantages of innovations, their risks should always be taken into account: “Not everything that is new is always better.” He added that it was important to weigh up the potential benefits and risks, especially when it came to technological innovations: “And so, as central banks, we are also engaged in an intensive exchange about the pros and cons of digital money”.

BIS calls on central banks to act

One problem repeatedly mentioned in this context is that bank customers could clear out their accounts in times of crisis because they consider digital central bank money to be safer in such times. To prevent this, many central banks are considering imposing caps to prevent the hoarding of digital money holdings. The Bank for International Settlements (BIS) has called on central banks to press ahead with their work on digital currencies. Otherwise, they risk being left behind by the digital initiatives of large technology groups such as Facebook. rtr

Commission: stock exchanges to provide price data for EU-wide register

According to an EU draft, stock exchanges in the EU are to provide data on trading transactions for a Europe-wide comparison register in the future. Such a system, called “Consolidated Tape”, should, among other things, enable investors to identify the most favorable deals for them and generally lead to more transparency in stock exchange trading, as emerges from a draft paper seen by Reuters on Thursday. Trade data is to be collected on this system across Europe. The proposal is part of a package of reforms expected next week by the EU Commission to strengthen capital markets in the EU after Brexit.

Banks, asset managers, and other investors have so far had no clear means of comparison when the same security is traded on different venues across the EU. According to the document, stock exchanges would be obliged to contribute to an EU-wide register for shares and bonds in return for the appropriate remuneration. All sources of market data would have to make standardized core data available to collection points, the document said. Exchanges would be guaranteed minimum revenues for providing price data.

The topic also plays an important role in the discussion about controversial remuneration systems at online brokers – so-called payment for order flow (PFOF). In this practice, customer orders are brokered to specific trading venues and the brokers receive remuneration for this. One of the criticisms of the PFOF model is that orders may go where brokers are guaranteed the highest payments, rather than where there are the best prices for customers. The creation of a “consolidated tape” would possibly lead to more transparency and comparability. rtr

30 years of the Weimar Triangle: between aspiration and reality

David Gregosz

For years, the Weimar Triangle has been struggling with insignificance. The enormous potential of the three states, which together account for about 45 percent of the EU’s gross domestic product and nearly 40 percent of its population, and which also form a geographic axis between Western and Eastern Europe, contrasts with a depressing reality.

The last joint meeting of foreign ministers indeed took place only in October 2020, at which the will to intensify relations was emphasized. All too often, however, such statements turned out to be empty phrases from which no concrete efforts emerged. The trilateral relationship is marked by profound disagreements and differences.

Franco-German relations are largely exempt from this, as the two states only reaffirmed their special relationship with the Treaty of Aachen in 2019. Tensions, on the other hand, are particularly prevalent in the two countries’ ties with Poland. The decisive factor here is the coalition led by the PiS party that has been in power since 2015.

Tensions caused by judicial reform

First and foremost, the controversial judicial reform has for years been a source of contention with European partners, who see the lasting rule of law at risk and, not least, brought about the first Article 7 process against. Discrepancies also exist over the new media law, which opponents criticized as an attack on freedom of opinion and freedom of the press. The German-Russian cooperation on the Nord Stream 2 gas pipeline is also causing unease in Warsaw.

Despite all the differences at the national level, regional and local relations have proven to be an anchor of stability. For example, partnerships exist between North Rhine-Westphalia, Silesia, and Hauts-de-France, as well as between Brandenburg, Mazowieckie, and the Île-de-France. These “regional Weimar triangles” have the advantage of maintaining relations relatively independently of national tensions.

Civil society cooperation

In addition, bilateral cooperation in the form of Eurodistricts and Euroregions has been consolidated in the border regions. In addition, there are town twinning schemes, university cooperation, and youth organizations that promote intercultural exchange. This civil society level and its positive effects should not be forgotten when evaluating the triangle, even if they cannot replace exchanges at the national level.

For (long-term) cooperation to appear possible at all, however, there would need to be a congruent idea within the trio about the goals and function of the triangle as the basis of any cooperation. Institutionalizing the loose alliance would also be a way of expanding relations, but due to current and historical developments, it appears to be a mere thought experiment.

To consign the Weimar Triangle to the history books as a closed chapter because of the problems described above would certainly be the wrong approach. But as desirable as intensive trilateral cooperation at the national level may seem, there is currently not much to be said for its renaissance.