EuroCommerce InBrief | Issue 191 | 26 May 2020

Commission to launch ambitious COVID Recovery Plan and revised 2020 Work Plan

Commission President von der Leyen is set to present her Recovery Plan tomorrow. We reported on her initial ideas as she presented them in a speech to the European Parliament earlier this month. In this, she saw no quick return to business as usual, the need for help to countries worst hit and with the least resources to refloat their economies. The Single Market was being undermined and this needed to be resolved, and the EU needed to act to strengthen economies by focusing on Green Deal, digitalisation and Resilience. This needed the EU to borrow money and increase its own resources through a bigger budget under the 7-year Multi-Annual Financial Framework. The money would be focused on a Recovery and Resilience focused on countries with most severe economic and social impacts from the crisis. More money would be provided for kick-starting the economy and helping mobilise private investment in key sectors and technologies and help investment in key value chains crucial to EU resilience and strategic autonomy. The programme, frontloaded to already start in 2020, would include direct grants as well as loans to countries and companies in most need. She also hinted at some link between money and ‘a mechanism to protect the rule of law’. Meanwhile, President Macron and Chancellor Merkel last week put forward their ideas for a €500 billion recovery plan allowing the EU to borrow money – a departure from German opposition hitherto to EU taking on such debt. Denmark, Sweden, Austria and the Netherlands have already expressed opposition to the Franco-German initiative and providing grants, rather than loans in a paper last week. Martin Selmayr, ex-Commission Secretary-General was quoted in the press in Austria as revealing that the Commission was also planning a €500 billion budget, but has meanwhile retracted this as a ‘misunderstanding’. The recovery plan will be accompanied with a further revised work programme for 2020 to reflect delays caused by the crisis.

Contact: Neil McMillan

Commission publishes its Farm-to-Fork strategy

The European Commission last week released its Farm-to-Fork strategy and its biodiversity strategy, both part of the Green Deal. The Farm-to-Fork strategy, led by DG SANTE, aims at protecting the value of the European food system but also promoting it on the global stage by making Europe’s food the global standard for sustainability. Many of the proposed actions build on existing EU initiatives on e.g. food waste, food fraud, animal welfare, front of pack and origin labelling. The strategy steps up existing legislation for animal welfare, pesticide use and protecting the environment. We sent a briefing paper, setting out the main elements and implications of the strategy, to our Food Committee last week, and issued a press release calling for the same solidarity within the whole food supply chain as we have seen during the Covid-19 crisis to reap the opportunities of the sustainability transition. The Commission will review this strategy by mid-2023 to assess whether the action taken is sufficient to achieve the objectives or whether additional action is necessary. Farmers have opposed the strategy as ignoring the reality of agriculture imposing extra burdens on them at a time of crisis.

Contact: Els Bedert or Carla Valeiras

Commission report finds legal framework for retail alliances needs no change, and no direct impact on farmers

The Commission’s Joint Research Centre (JRC) has released its report on retail alliances, a follow-up to a European Parliament demand in negotiating the Unfair Trading Practices Directive and to a DG AGRI/JRC workshop held in November 2019. We contributed to the report with a legal study and an economic literature review supported by members. The report provides a balanced and thorough analysis of national and European alliances. It concludes that there is no direct impact of the activities of European Retail Alliances on farmers. It considers the existing legal framework sufficient to regulate alliances’ activities; and that the diversity of alliances needed any assessment to be on a case-by-case basis. This is a result of much hard work by staff and members over the past twelve months, and an important step in enabling retailers and wholesalers to continue seeking better sourcing conditions. The Commission’s DG Competition will use the report as part of their ongoing revision of competition rules covering joint purchasing agreements. In a joint statement, manufacturers and farmers criticised the analysis and called for further scrutiny of alliances. We will be monitoring the issue continuously and prepared for shifting gear into a coordinated advocacy campaigning as and when the issue flares up again.

Contact: Christel Delberghe or Katinka Worsoe

Preliminary findings of Commission study confirm that brands impose Territorial Supply Constraints

The Commission’s DG GROW and their consultants presented the preliminary findings of their study on Territorial Supply Constraints (TSCs) to our Supply Chain Committee. Suppliers use TSCs to prevent retailers and wholesalers from taking advantage of the single market in sourcing products. The study confirms the prevalence of TSCs imposed by A-brand manufacturers, leading to fragmentation of the single market and higher prices for consumers. Despite suppliers’ allegations, they found no evidence of TSCs in private label products. The study is a follow-up to the Commission communication on Retail Market Fit for the 21st century; its final results will be released in the summer. Together with the fine imposed last year on the brewer ABInbev for imposing such restrictions, and a current investigation of Mondelez, the confirmation that TSCs are a barrier to the functioning of the single market to the detriment of consumers is an important step towards these barriers being addressed.

Contact: Christel Delberghe or Katinka Worsoe

Retailers and wholesalers call for urgent amendment of card fees regulation

EuroCommerce has written to the European Commission pressing them to act to address the growing problems facing retailers and wholesalers due to the limited scope of the current Interchange Fee Regulation (IFR). It follows an earlier letter to Commission Executive Vice-President Vestager, and asks for the Commission’s report on the application of the IFR, due to be published in the coming weeks include proposals to amend the legislation. Card schemes have been steadily increasing the fees imposed on retailers which the IFR does not cover. Data provided by a global payments consultancy CMSPi, indicates that since 2018 one card scheme increased its fees by 150%. This and other fee increases are estimated to cost EEA merchants an additional €794 million every year, substantially reducing the intended benefits to merchants and consumers, of the IFR. We also issued a press release setting out the problem and the solution we were seeking. The letter was accompanied by a legal opinion from a distinguished academic expert and senior counsel in European competition law putting our arguments forward and to highlight to the Commission that further action could, and should, be taken. The SME Envoys Network has also been given copies of the letter and supporting document and, given the impact on small merchants, asked to act with their national authorities.

Contact: Peter Robinson

European Parliament presses ahead with Digital Services Act reports

The IMCO, LIBE and JURI Committees of the European Parliament have been debating their draft own initiative reports on the Digital Services Act. The EP IMCO report from Alex Saliba (S&D, MT) was presented to the committee last week, and attracted more than 900 amendments. Pablo Arias Echeverría (EPP, ES) demanded obligations for online marketplaces to identify manufacturers and sellers from third countries, clarified liability in active and passive hosting, and an ex-ante list of obligations/prohibitions for gatekeeper platforms. Dita Charanzová (RE, CZ) wanted “harmful” legal content not to be regulated in the DSA and instead a Good Samaritan principle (which Saliba rejected) and precedence over all other infringements for material related to terrorism, illegal hate speech, or child sexual abuse. She also wanted smart contracts providing different rules for B-to-B and B-to-C platforms. Alexandra Geese (Greens, DE) focused on transparency and interoperability, and wanted fines to be up to 5 percent of a company’s worldwide annual turnover.

Contact: Ilya Bruggeman

EuroCommerce responds on competition market definition notice

We have submitted a response to the Commission’s consultation on a roadmap for the review of the Market Definition Notice. This is the first step in the review and will be followed by an extensive stakeholder consultation and studies. The Market Definition Notice is a fundamental tool for assessing competition in any given market and the competitive landscape in any sector. After the failed Alstom-Siemens rail equipment merger, the French and German governments particularly have been pressing for a change in the rules to look at global competition and allow the growth of EU champions. Vestager has resisted this, but the review was also a recommendation of a group of experts last year on competition policy and digitalisation. Our contribution underlines, as Vestager has said, that competition at home continues to be the best way to foster global competitiveness; digitalisation is, however, changing the competitive landscape. It also points to this leading to an expansion of the relevant selling market for non-food retailers; that the relevant procurement market is increasingly European rather than national. Our response also points to the need to update the wholesale market definition, a better account taken of the low substitutability of A-brand products and the effect of territorial supply constraints; and a new methodology to assess zero-pricing markets.

Contact: Christel Delberghe or Katinka Worsoe

Commission publishes its 2019 Trade Defence Report

The European Commission recently published its Trade Defence Report for 2019. The Commission last year launched 16 investigations (compared with 10 in 2018) and imposed 12 new measures (6 in 2018). At the end of 2019, the EU had in place 140 trade defence measures, 5% more than the year before. Those included 121 anti-dumping, 16 anti-subsidy and three safeguard measures. 93 of the existing anti-dumping and anti-subsidy measures were against China, with 10 against Russia, 7 against India (7 measures) and 6 against the US. The Commission believes that these duties led on average to an 80% decrease in unfair imports, leaving other foreign supplies unaffected, protecting (they claim) 343,000 jobs in the EU. EuroCommerce has said that it supports all justified efforts to level the playing field, EuroCommerce but has pressed the Commission also to look at how many jobs in other sectors lost because of these trade restrictions, and to calculate the costs they impose on European companies.

Contact: Harald Past or Jürgen Lang

Commission steps up monitoring of steel and aluminium imports

The European Commission introduced a new monitoring system for steel and aluminium imports to allow a quicker and more transparent assessment of import trends. The new monitoring system, which has been in place since 15 May, replaces the prior surveillance system introduced for steel in 2016 and for aluminium in 2018. The new system is based on import statistics available two weeks after the actual imports, thus considerably earlier than the official Eurostat data. The new methodology measures actual imports rather than import intentions under the previous system. The relevant import statistics will be published and updated on a monthly basis on the Commission’s website which also contains more detailed information. Meanwhile, Eurofer, the lobby group for the iron and steel industry is using the COVID crisis to argue for restrictive measures effectively stopping imports of steel. We are writing to the Commission to oppose this move in light of the direct impact on our wholesale and trader members.

Contact: Harald Past or Jürgen Lang

While post-Brexit talks falter, the UK seeks trade deal with the US

In a recent exchange of letters between the EU Brexit negotiator Michel Barnier and his UK counterpart David Frost, the UK has accused the EU of seeking to maintain EU control unprecedented in other trade agreements over UK decisions on competition policy and fisheries, while Barnier voiced concern at the UK delaying an already tight timetable and rejecting the EU’s wish to maintain a level playing field with the UK. For the first time after a meeting of the special committee on post-Brexit operations between Ireland and Northern Ireland the UK admitted that, contrary to claims by Prime Minister Johnson, new customs checks and processes will have to be put in place for goods coming into Northern Ireland (which remains part of the EU customs area and single market) from the rest of the UK. The Commission, and increasing UK press comment point to the need for an extension of the transition period to avoid even more economic damage on top of the COVID crisis. Meanwhile the UK and the US have launched their first formal round of trade negotiations. The UK hopes that parallel negotiations with Washington will put pressure on the EU to compromise. The first round of talks is set to take two weeks, with further rounds roughly every six weeks. Britain hopes to win lower goods tariffs on its exports of things like cars and ceramics, as well as a package on services, among other things. Against this, the US is pressing for changes to UK rules on food standards and pharmaceutical pricing, both of which the UK has rules out. Ahead of the November US elections, any deal looks very unlikely.

Contact: Harald Past or Jürgen Lang

Commission starts public consultation on revision of the Waste Shipment Regulation

The Commission’s new Circular Economy Action Plan plans a revision in 2021 of the existing Waste Shipment Regulation, which seeks to control transport of waste, including a ban on the export of hazardous wastes to non-OECD countries and a ban on the export of waste for disposal. The Commission has launched a public consultation on the revision of the Regulation to assess the need for further EU action in this area and consider various policy options and their economic, social and environmental impact. The consultation looks at facilitating the re-use and recycling of waste in the EU, restricting exports of harmful waste outside the EU and strengthening enforcement. This consultation will be complemented by targeted interviews with stakeholders and by a dedicated workshop, planned for Q2 or Q3 2020. EuroCommerce is preparing a response to the consultation with members.

Contact: Nick Dornheim

Commission studying effectiveness of Tobacco Products Directive

The Commission is conducting a study on the application of the 2014 Tobacco Products Directive (TPD) to assess its working and challenges faced by various stakeholders. The Directive introduced a ‘track & trace’ system requiring all tobacco products to be marked with a unique identifier, for economic operators in the supply chain to record the movements of these products and transmit the information to a central data storage facility. In 2018, the Commission published an Implementing Regulation (EU) 2018/574 to provide guidance on the traceability system which left too little time for the system to be fully operational by its coming into force in May last year. EuroCommerce has highlighted in its response the many difficulties still experienced by members in seeking to implement this highly complex system. We have asked the Commission urgently to resolve gaps in the guidance on e.g. what to do in case of returns or theft, and pointed to the refusal by some manufacturers to cover our members’ costs, as required under directive, of installing and maintaining the equipment for the track and trace system. The system has proved to be very expensive and burdensome for business as well as for competent authorities to enforce. It remains to be seen whether it will deliver on its objective to reduce illicit tobacco trade and improve public health.

Contact: Els Bedert or Carla Valeiras