Dear Readers,

With only two weeks left until the European elections of 23-26 May 2019, Europeans find themselves at the beginning of a months-long period of crucial transformations that are expected to significantly impact citizens and businesses in the medium- and long term.

In addition to a newly elected European Parliament, which will reconvene in the beginning of July, we will also see the appointment of a new European Commission President and Commissioners as well as the assumption of office of a new President of the European Council. In a dedicated special section of this issue of our newsletter, we cover one key aspect of these meaningful transformations, namely: 'Who will be the next Commission President?'.

Beyond these matters of high politics, and despite the European Parliament's previous legislative term having ended in April, there is still a substantial amount of new EU policy and regulatory developments that have the potential to significantly impact our clients. In this issue, we provide you with updates on the following key files:

  • The new Open Data and Public Sector Information Directive
  • European Parliament strengthens EU consumer protection rules
  • Mobility Package: Parliament's position on overhaul of road transport rules
  • Trade: EU takes home clear wins at EU-China summit
  • The EU Trade Secrets Directive - 10 months later

Enjoy this edition of 'EU Impact'!

Your EU Regulatory, Trade and Government Affairs team in Brussels

Open Data Policy

The new Open Data and Public Sector Information Directive

On 4 April 2019 the European Parliament approved the new Open Data and Public Sector Information Directive (PSI). Last year, the European Commission proposed a revision of the existing legislative framework in order to facilitate the creation of a common data space in the EU.

Public sector information includes all the information that public bodies produce, collect or pay for, such as anonymised personal data on household energy use or more general information about national education or literacy levels. The EU Open Data policy aims at generating value for the economy and society through the re-use of this type of data, as it is estimated that the total direct economic value of public sector information will increase to €194 billion by 2030.

The first legal framework was established in 2003 by the PSI Directive and was last revised in 2013. However, an update of this regulation was needed to set out the conditions under which public sector data should be made available for re-use:

  • All public sector content that can be attained under national-access-to-documents rules is freely available for re-use and, except very limited cases, no costs would be charged for it;
  • There is a particular focus on high-value datasets such as statistics or geospatial data, due to their high commercial potential;
  • The data produced by public service companies in the transport and utilities sector that, under national or European law should be made available for re-use, are obliged to comply with the principles of the new PSI directive. Moreover, the use of appropriate data formats and dissemination methods needs to be ensured;
  • New rules to reinforce transparency and to limit business agreements that could lead to exclusive re-use of public sector data by private partners;
  • More real-time data will allow companies to develop innovative products and services, such as mobility apps.

Consumer Protection

European Parliament strengthens EU consumer protection rules

As part of the "New Deal for Consumers" package, announced by the Juncker Commission in 2017, the European Parliament approved the new directive aiming at strengthening EU consumer protection rules in the internet age. The updated legislation amends four existing consumer protection directives and introduces new transparency rules for online rankings and reviews, clarifies how to deal with dual quality of products, and establishes fines that could amount to 4% of the trader's annual turnover.

  • Transparency: the new measures ensure consumers to be clearly informed whether the goods or services they are purchasing online are sold by a trader or a private person, which allows to know in advance which protection they will benefit from if something goes wrong; secondly, the new directive introduces transparency rules for online marketplaces and comparison services that now have to disclose the main parameters determining how the consumers' search result is ranked (whether it derives from a paid placement and if a personalized pricing has been used).
  • Dual quality of products: the directive clarifies the conditions to define the dual quality of products, i.e. when products marketed under the same brand in different Member States have significantly unjustified different composition or characteristics, as misleading practice and specifies how national authorities should deal with it.
  • Infringements: the new rules establish severe penalties for infringements of consumers' rights that, in case of a harm in several EU countries, could amount to 4% of the trader's annual turnover.

Transport

Mobility Package: Parliament's position on overhaul of road transport rules

On 4 April 2019, the European Parliament approved three positions that aim at improving working conditions for drivers, better enforcement of cabotage rules and fighting illegal practices in international transport. The proposals are part of the "Mobility Package" tabled by the EU Commission in May 2017.

  • Posting of drivers: the European Parliament proposes to exclude bilateral transport (with up to two additional activities of loading/unloading) and transit from posting rules, which, on the contrary, should be applied to cabotage and cross-border transport operations. In this way, professional drivers will benefit from the principle of the same pay for the same work at the same place.
  • Driving time and rest periods: Parliament proposal aims at encouraging companies to organise a regular return of drivers in their home country at least every 4 weeks and to guarantee that the legitimate weekly rest would not be spent in the cabin.
  • Cabotage: the existing restriction on the number of cabotage operations would be replaced with a 3 days limit, and a registration of border-crossing through vehicle tachographs will be introduced; to prevent "systematic cabotage" the European Parliament also proposed a 60 hours stop in the home-country before heading for another cabotage.
  • Letterbox companies: to fight letterbox companies that distort competition, road haulage businesses would need to have substantial activities in the country where they are registered.

The three EP positions are now awaiting Council first reading position and budgetary conciliation convocation.

Trade

EU takes home clear wins at EU-China summit

On 9 April 2019, the 21st EU-China Summit took place in Brussels with trade and economic issues being the key topics.

Prior to the summit, the EU warned that it is prepared to take a more aggressive stance against economic competitors who engage in unfair practices and that it will make full use of its trade defence instruments (including the new foreign investment screening framework) to safeguard its interests.

Given the outcome of the summit, it seems that that message has been heard. For the first time China agreed to engage with the EU on strengthening international rules on industrial subsidies, one of the EU's main priorities in the context of the envisioned WTO reform.

"China and Europe both have a strong economic interest in maintaining significant trade flows, which are possible thanks to the rules-based trading system. However, for this system to continue to operate, it needs to be quickly updated," Council President Donald Tusk stated after the summit.

The EU will work for a more balanced economic relationship with China while at the same time pursue deeper engagement on global and multilateral issues, including reform of the World Trade Organisation to ensure its continued relevance and allow it to address global trade challenges. In that context, the EU and China proofed to be strategic partners in preserving the international rules-based trade system, sending a clear joint message to the Trump Administration.

Key European media outlets labeled the joint statement yielded at the summit as being "robust", adding that the summit's outcome "was an illustration that a block known for soft power could take a harder line, and also that its commitment to dialogue is a source of strength not weakness".

Intellectual Property

The EU Trade Secrets Directive - 10 months later

After three years of talks and negotiations, the EU Trade Secrets Directive 2016/943 finally came into force on 5 July 2016, leaving the EU Member States until 9 June 2018 to transpose it. Little more than ten months after this deadline, most EU Member States have implemented the Directive, either through the introduction of a new specific trade secret law (e.g. in the UK, Germany, Spain and Hungary) or by amending existing legislation (e.g. in Belgium, France, Poland and Slovakia). Some Member States (Cyprus, Luxembourg, Romania and Slovenia), however, have yet to transpose the Directive.

The overall aim of the Directive is to better protect undisclosed know-how and business information (trade secrets) against unlawful acquisition, use and disclosure, by raising and harmonizing the minimum protection standards for trade secrets across the EU. To that end, the concept of "trade secret" has been defined, and the Directive sets out what is to be understood by lawful acquisition, use and disclosure of a trade secret and what would be unlawful. Lastly, the Directive also largely harmonizes the remedies which are available to trade secret holders, both in terms of interim and final relief.

The Directive defines a trade secret as information which must:

  1. be secret (not generally known or readily accessible to people in the field)
  2. have commercial value because it is secret; and
  3. have been subject to reasonable steps to keep it secret.

Most observers agree that this last requirement will generate some controversy and will have to be clarified through the case-law. The likely resulting fragmentation might thus very well end up undermining the very purpose of the Directive, namely to protect trade secrets in a uniform manner throughout the EU. Time will tell.

SPECIAL SECTION - 2019 EUROPEAN ELECTIONS MONITOR

Who will be the next Commission President?

With the elections approaching fast, political discussions both in Brussels and European capitals are in full swing, and political circles as well as media outlets are increasingly floating names of potential candidates for the Commission Presidency.

Although it is the European Council that is entitled to nominate the candidate for the position of President of the European Commission, it will have to take into consideration the political realities within the European Parliament (i.e. winning lead candidate/ Spitzenkandidat and ruling coalition options). Whereas EU leaders have declared that the winning Spitzenkandidat will not automatically be nominated by the European Council, some of them (including Council President Donald Tusk and German Chancellor Angela Merkel) have acknowledged the concept's potential decisive role.

The power game of who will eventually be placed in the top job as European Commission President is a highly politicised discussion that is to be looked at from various angles. Not only is the selection of the Commission President a bone of contention amongst EU leaders and regions across the EU, who call for a geographical balance (e.g. Eastern European states calling for stronger representation). Due to the Spitzenkandidaten procedure, the allocation of the Commission Presidency also heavily depends on party politics. Other factors considered relevant include experience in leadership positions (in particular government experience), language capabilities and age.

Bearing in mind that it is not guaranteed that the lead candidate of the strongest political party will necessarily be appointed Commission President, please find below the names of individuals which have been nominated lead candidate of their respective political parties, as well as other relevant individuals who are likely to still be nominated Spitzenkandidat or to be proposed outside the framework of the lead candidate process:

  • Manfred Weber (Germany | EPP) - A Member of the European Parliament since 2004 and chair of the EPP in the European Parliament since 2014, Weber has been nominated as Spitzenkandidat of the EPP for the 2019 elections. Weber is a member of the German Christian Social Union (CSU), the Bavarian sister-party of Chancellor Merkel's conservative Christian Democratic Union (CDU). With German Chancellor Merkel and German EPP delegates' pronounced backing, and with a more vigorous stance on matters such as border controls and Turkey's prospects for EU membership, Weber won the post of Spitzenkandidat of the conservative EPP in a landslide victory. What might impede the European Council from appointing Weber as the next Commission President, however, are his German nationality and lack of top leadership experience. French President Macron, amongst other EU leaders, may find it difficult to support a German candidate, and all previous Commission Presidents have at least served as ministers on the national level.
  • Michel Barnier (France | EPP) - Barnier, a former European Commissioner and decades-long supporter of EU integration, is currently the EU's Brexit negotiator, and is strongly rumoured to be an excellent candidate for the job. Due to his negotiator's position, Barnier himself declined to run as a potential EPP nominee in the lead candidate process. Should EU leaders be unwilling to appoint German EPP Spitzenkandidat Weber as the next Commission President, the European Council may decide to diverge from lead candidate process (although this would be unpopular amongst the electorate, and may trigger a veto of the European Parliament) and to consider Barnier for the position. It remains to be seen, however, whether Barnier would receive the support of French President Macron, who is member of a different political party. According to some, Barnier's age (68) may not play in his favour, potentially making him appear too much as part of 'the establishment', while many EU citizens are calling for a generational change.
  • Frans Timmermans (The Netherlands | S&D) - Timmermans has been nominated as the lead candidate of the Party of European Socialists (PES), represented as the progressive S&D group in the European Parliament. A former Dutch foreign minister, Timmermans is currently the First Vice-President of the European Commission and the European Commissioner for Better Regulation, Inter-Institutional Relations, Rule of Law and the Charter of Fundamental Rights. The First Vice President has a strong profile for countering nationalism and defending the EU's values, most recently vis-à-vis the current Polish Government. Critics note that Timmermans chances of being appointed the next President of the European Commission are low due to his party's current weak standing back in the Netherlands. Moreover, some EU leaders from eastern European countries or with rather nationalist agendas may well oppose Timmermans as a future Commission President due to his work in defending the rule of law.
  • Margrethe Vestager (Denmark | ALDE) - Vestager, the high-profile and popular Competition Commissioner, is considered a Macron-favourite, while not representing a favourite choice by Germany. Judged by the style of her tenure as a Commissioner, Vestager, as a potential candidate for the European Commission Presidency, might choose to run a political Commission. The liberals announced in November 2018 that they will not comply with the Spitzenkandidaten procedure, in order to disrupt a system, which they believe is dominated by the EPP. At the upcoming ALDE congress in February 2019, a group of seven liberal lead figures will be announced under the name of 'Team Europe'. In order to represent the liberals in the upcoming elections. As remarked in our previous analysis of August 2018, Commissioner Vestager is likely to form part of this group - a prediction that remains to be verified at the congress in February.
  • Jan Zahradil (Czech Republic | ECR) - The Member of the European Parliament's currently third largest group, the European Conservatives and Reformists, was nominated the Spitzenkandidat of the Alliance of European Conservatives and Reformists, of which he is president. Zahradil is the first lead candidate from an eastern European country and calls for 'genuine EU reform'. He chairs Parliament's international trade committee and used to be the ECR's group leader in 2011. It is unlikely, however, that the MEP will be appointed Commission President, in particular because, following Brexit, the ECR will lose 19 of its MEPs.
  • Ska Keller & Bas Eickhout (Germany & the Netherlands | European Greens) - Members of the European Parliament Skeller and Eickhout have been elected have been elected lead candidates of the European Greens.
  • Guy Verhofstadt (Belgium | ALDE) - The leader of the liberal democrats in the European Parliament and former prime minister of Belgium will most likely be amongst the seven candidates which liberals will announce as their 'Team Europe' for the EU elections in February 2019. Verhofstadt was Spitzenkandidat of ALDE already in 2014, and is considered a close ideological ally of French President Macron.

EU REGULATORY, TRADE AND GOVERNMENT AFFAIRS

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