What’s going on in Brussels? This section aims to provide the reader with an overview of some of the most significant issues being addressed by the EU institutions and the main topics that have been discussed in the last month.
European fund for strategic investments
On 28 May 2015 the Latvian Presidency of the Council along with the European Parliament reached a provisional agreement on a European fund for strategic investment (EFSI) aimed at stimulating the economy. This is the core of the Investment Plan for Europe and the famous Euro 300 billion stimulus plan promised by Commission President Juncker.
The EFSI will be established within the European Investment Bank by an agreement between the Commission and the EIB. The fund will be built on €16 billion in guarantees from the EU budget and €5 billion from the EIB. The fund will support projects in different areas, including transport, energy and broadband infrastructure, education, health, research and risk finance for SMEs. The EFSI will complement and be additional to on going EU programmes and traditional EIB activities. The Fund will become operational and start financing projects at the end of the summer.
The EU funding is seen as seed capital which will encourage Member States to put up the rest of the capital.
Single-‐member limited liability companies
On 28 May 2015, the Competitiveness Council (a configuration of the Council of the European Union which is responsible for trade, economy, industry, research and innovation ad space from all the EU Member States) agreed on a compromise text for a draft directive aimed at creating a new status for single-‐member private limited liability companies.1
The agreement constitutes the Council's general approach, which will serve as the basis for forthcoming negotiations with the European Parliament. The draft directive aims to facilitate the cross-‐border activities of businesses, particularly SMEs, and the establishment of single-‐member companies as subsidiaries in other member states, by reducing the costs and administrative burdens involved in setting up these companies. This will enable businesses to enjoy the full benefits of the internal market.
The main elements of the agreement include: online registration, minimum capital requirement of €1, and rules on transfer of seat to another Member State. Member States would have to ensure that their national legal systems provide for a form of company that complies with common rules established in the directive. The legal form would be established at the national level. It would have an EU-‐wide abbreviation: SUP (Societas Unius Personae).
“Made in”: Council rejects Presidency compromise
On 28 May 2015, following a long public debate and informal discussions, the Competitiveness Council remained opposed to the Latvian Presidency on the issue of mandatory marking of origin on consumer products (“Made in”), which is set out in Article 7 of the Proposal for a Consumer Product Safety Regulation2.3
In light of a recent cost/benefit study issued by the Commission, the Latvian Presidency had proposed a “middle way” at the Competitiveness Council. The “Made in” clause set out in Article 7 was to be applied only to the ceramics and footwear industries, for which the measure would have potential benefits.
However, this “middle way” proposal did not convince either the Article’s opponents nor the supporters of “Made in” (including Italy). And consequently no agreement has been reached yet.
No hiding from taxes
On 27 May 2015 EU and Switzerland signed a new tax transparency agreement, which will significantly improve the fight against tax evasion. Under the agreement, both sides will automatically exchange information on the financial accounts of each other's residents as from 2018. This spells an end to Swiss bank secrecy for EU residents and will prevent tax evaders from hiding undeclared income in Swiss accounts.
Rural Development Programmes
On 26 May 2015 the Commission approved a further 24 Rural Development Programmes aimed at improving the competitiveness of the EU farming sector, caring for the countryside and climate, and strengthening the economic and social fabric of rural communities in the period until 2020. Funding worth 27 billion EUR from the EU budget, co-‐financed by further public funding at national/regional level and/or private funds, is made available. Italy is one of the Member States concerned.
Untransposed Banking Directives
The Commission has requested Bulgaria, the Czech Republic, France, Italy, Lithuania, Luxembourg, the Netherlands, Malta, Poland, Romania and Sweden to fully implement the Bank Recovery and Resolution Directive (BRRD) 4 in national law. This Directive is a centrepiece of the EU's Banking Union that was put in place to create a safer and sounder financial sector in the wake of the financial crisis. The deadline for the transposition of these rules into national law was 31 December 2014.
The failure to implement Directives within the time limits fixed by EU law means that the provisions of the Directives are enforceable even in the absence of local law transposing the EU norms into national law. Companies damaged by the failure to transpose can sue the Member State for that damage.
Merger in the railway sector
On 13 May 2015, the Commission gave to the French rail operator SNCF the green light to acquire the sole control of Eurostar International Limited.5 Eurostar is the rail operator using the Channel Tunnel. The Commission’s decision is conditional on compliance with commitments designed to facilitate the entry of new rail operators onto the London-‐Brussels and London-‐ Paris routes, on which Eurostar is currently the only operator. The Commission was concerned that the deal as originally notified might hinder the entry of competitors into these markets. The serious doubts identified relating to access to stations in France and Belgium and to maintenance centres in France, Belgium and the UK are the same as those raised when Eurostar was set up in 2010. The commitments offered by SNCF, Eurostar and SNCB address these concerns.
Antitrust in the airlines sector
On 13 May 2015, the Commission adopted a Decision that renders legally binding commitments offered by Air France/KLM, Alitalia and Delta, members of the Sky Team airline alliance, to lower barriers to entry or expansion on three transatlantic routes. The Commission had concerns that the cooperation between these airlines may harm competition for all passengers on the Amsterdam-‐New York and Rome-‐New York routes and for premium passengers on the Paris-‐New York route, in breach of EU antitrust rules. After market testing commitments offered by the airlines operators concerned, the Commission has considered that they address its concerns, and has therefore decided to make them legally binding for a period of ten years.
E-‐commerce sector inquiry
On 6 May 2015, the Commission launched an antitrust inquiry into the e-‐commerce sector in the EU. This inquiry aims to allow the Commission to identify possible competition concerns affecting EU e-‐commerce markets. The sector inquiry will focus on potential barriers erected by companies to cross-‐border online trade in goods and services where e-‐commerce is most widespread such as electronics, clothing and shoes, as well as digital content.
VAT for e-‐books saga
On 11 May 2015, the Jean-‐Claude Juncker announced that the Commission will propose, in early 2016, an act allowing Member States to apply a reduced VAT rate to online books and e-‐ books. This would place them on an equal footing with print media and paper books. The debate is not new. Back in 2011 the Commission had declared that similar goods and services should be subject to the same VAT rate. Today this is still not possible in light of the provisions set out in European VAT Directive.6 On 4 March 2015, the Court of Justice found that the digital and print book sectors are not the same. Paper books in France and Luxembourg benefit from reduced VAT rates of 5.5% and 3% respectively. But the decision of these two Member States to apply the same rate to electronic books was considered to be an infringement of European VAT Directive (see Across EU number One).7
A possible 2016 Commission's proposal will only be the first step in a long process of negotiations between the Member States, as any revision of taxes in the EU requires the unanimous approval of the 28. It appears that most Member States would oppose the change being proposed by Juncker.
What’s app in the EP Plenary Session?
During the plenary session of the European Parliament in Strasbourg on 18-‐21 May 2015, MEPs approved measures to prevent proceeds from so called conflict minerals being used to fund armed conflicts and called on governments to break the deadlock on plans to harmonise maternity leave across Europe. EU firms importing minerals such as tin, tantalum, tungsten and gold must be certified by the EU to help ensure the income flowing to the producers does not fuel conflicts and human rights abuses.
MEPs also called on EU countries to resume negotiations on plans to offer at least 20 weeks of maternity leave. Due to the four-‐year deadlock, the Commission is now threatening to withdraw proposals unless an agreement is reached soon.
On 20 May 2015, MEPs adopted new rules to help fight money laundering and terrorist financing in the EU, one of the key actions in the European Security Agenda presented in April. The new EU anti-‐money laundering framework aims to contribute to the fight against terrorist financing and money laundering by: i) facilitating the work of Financial Intelligence Units from different Member States to identify and follow suspicious transfers of money and facilitate the exchange of information; ii) establishing a coherent policy towards non-‐EU countries that have deficient anti-‐money laundering and counter-‐terrorist financing regimes; iii) ensuring full traceability of funds transfers within, to and from the EU. The Commission will have now to supplement this legislation by working on a supranational assessment of risks.8
Among other issues, MEPs discussed measures to tackle the migrant crisis in the Mediterranean, including a fairer distribution of asylum seekers among EU countries and more funds for securing external borders.
Skype vs Sky
By judgment delivered on 5 May 2015 in Cases T-‐ 423/12, T-‐183/13 and T-‐184/13 Skype Ultd v OHIM, the General Court confirmed that there exists a likelihood of confusion between the figurative and word sign SKYPE and the word mark SKY. The General Court compared the SKY and SKYPE marks from a visual, phonetic and conceptual perspective and considered that, given the identical goods and services applied for, the marks were confusingly similar. The General Court's judgment does not imply that SKYPE will have to change its name, rather it prevents registration of the name as a trademark. An appeal by Microsoft (owner of SKYPE since 2011) can be expected.
Not all information is available to the public
By judgment on 12 May 2015 in Case T-‐623/13 Unión de Almacenistas de Hierros de España v Commission, the General Court found that documents exchanged between the Commission and a national competition authority in proceedings concerning an infringement of the competition rules are not, in principle, accessible to the public.
In that case, the Unión de Almacenistas de Hierros de España, a Spanish wholesalers’ association, sought access to all the correspondence exchanged between the Commission and the Spanish Competition Authority (CNC) on two procedures opened in Spain. The Commission granted access to some of the non-‐confidential exchanges, but refused to disclose CNC’s draft decisions and their summaries in English considering that disclosure would have undermine the protection of the commercial interests of the undertakings concerned as well as the protection of the purpose of investigations.
The 12 May 2015 ruling by the General Court found that the Commission’s approach was appropriate.