Luther brings us their bi-monthly review of EU legal developments affecting business in Europe in their May / June 2015 newsletter.
Digital Single Market
On 6 May 2015 the Commission announced its plans for expanding Europe’s digital economy. The proposal for this so-called Digital Single Market covers policy areas from telecoms to online retailing. The aim of the initiative is to take away regulatory barriers and move from 28 national markets to a single one. The Commission estimates this could contribute €415bn per year to the EU’s economy and create many new jobs.
The strategy includes 16 targeted actions based on three pillars. The first pillar aims at better access for consumers and businesses to digital goods and services across Europe: for example to end unjustified geo-blocking – a practice used for commercial reasons, when online sellers either deny consumers access to a website based on their location or re-route them to a local store with different prices. The Commission has already launched an antitrust competition inquiry into the e-commerce sector and will also issue a proposal to reduce differences between national copyright regimes.
Online Data Protection Regulation
On 15 June 2015 the Council agreed a general approach on the Commission’s proposal for the Data Protection Regulation in order to keep pace with technological changes. The EU proposal would strengthen the protection of consumers in the digital services market.
The regulation aims to increase consumers’ trust in digital services, for example by reinforcing the right to be forgotten. Citizens will also be better informed if their data is hacked. A right to data portability will make it easier for users to transfer personal data between service providers. The rules will also establish a ‘one-stop shop’ for businesses through a single set of rules across 28 Member States.
On 11 June 2015 the European Commission opened an investigation into business practices by Amazon in the distribution of electronic books (“e-books”) and in particular into certain clauses included in Amazon‘s contracts with publishers. These clauses require publishers to inform Amazon about more favourable or alternative terms offered to Amazon’s competitors. Publishers also may have to ensure that Amazon is offered terms at least as good as those of its competitors. The Commission says such clauses may make it more difficult for other e-book distributors to compete with Amazon by developing new and innovative products and services.
ECJ: UK energy efficiency tax reductions illegal
On 4 June 2015 the European Court of Justice (ECJ) decided that the lower rate of value added tax (VAT) for home energy efficiency renovation in the United Kingdom is illegal. The ECJ in Luxembourg agreed with the Commission that the lower price is in violation of the VAT Directive.
According to the Commission, which initiated the infringement proceedings against the UK, a reduced rate could only apply to transactions related to social housing. All British citizens may currently benefit from a reduced rate on the installation and supply of “energy-saving materials” for housing. However, now the UK government would no longer be able to offer the reduced 5% VAT rate. The ruling is not retroactive and would not affect those who had already pre-ordered or pre-paid.
Fines for retail food packaging cartels
On 24 June 2015 the European Commission fined eight manufacturers and two distributors of retail food packaging trays. The fine totals close to €116m for covering each company that has participated in at least one of five separate cartels.
For periods ranging from just over a year to almost eight years the companies carved up the retail food packaging market and fixed prices. They also allocated customers of polystyrene foam or polypropylene rigid trays to the various companies. These products are used for packaging fresh foods sold in shops or supermarkets. Each of the cartels operated within the framework of multilateral and bilateral contacts usually held on the fringes of legitimate industry gatherings. Meetings in person were complemented by numerous emails and phone exchanges.
Commission approves Orange’s Jazztel acquisition
On 19 May 2015 The European Commission approved under
the EU Merger Regulation the acquisition in the telecommunications industry proposed by Orange in France to take over Jazztel, a company registered in the UK but mainly active in Spain.
Orange offers services in more than 30 countries. The vast majority of fixed internet contracts in Spain are bundled with a mobile component so that a new entrant will need access to a mobile network to compete effectively. High investments are needed to enter the retail markets involving fixed internet access services with speeds up to 30 megabits per second. Both Orange and Jazztel are currently important competitors in the retail markets involving fixed internet access services in Spain. In particular, they have attracted a higher share of new customers and are the only two nationwide operators that have significantly increased their market shares in recent years. The remaining major competitors, Telefónica and Vodafone, would have been unlikely to reduce the competitive pressure.
Luther Rechtsanwaltsgesellschaft mbH advises in all areas of business law. Our clients include medium-sized companies and large corporations, as well as the public sector. Luther is the German member of Taxand, a worldwide organisation of independent tax advisory firms.