Election Blues in the U.S. and France

November is usually a quiet month for EU affairs, allowing working groups, Parliament committees and “trilogues” between the co-legislators to make progress behind the scenes.

This month, the EU institutions and the Member States followed closely the U.S. elections, and began to analyze its implications for Europe.  One such topic—the future of the transatlantic relationship—was discussed, at least indirectly, a few days after the election of Donald Trump. Indeed, on November 14, 2016, the EU Foreign Affairs and Defense Ministers held a joint meeting, focused on the “level of ambition” of the EU in the field of European security and defense cooperation.  The discussion was based on the proposed implementation plan for the “Global Strategy on Foreign and Security Policy” presented in June by High Representative and Vice President Federica Mogherini.  See the Global Strategy here, the implementation plan here, and the Council Conclusions here.

November 27 saw the conclusion of the “primary” of the French center-right party, les Républicains (see here), which resulted in the surprise victory of former Prime Minister Francois Fillon over the two main contenders, Alain Juppé and Nicolas Sarkozy.  Fillon is therefore expected to compete with Marine Le Pen, leader of the hard right Front National in the second round of the French presidential election, to be held in May 2017.  For Covington’s full analysis of these developments, please see the Global Policy Watch blog post on this topic by Jean De Ruyt, available here.

Tech and Digital Single Market Policies

On November 7, the European Parliament released its report on the Digital Content Directive.  The draft directive creates new consumer rules for mobile apps, software and other digital tools. The Parliament’s report, prepared jointly for the Committees on the Internal Market and Consumer Protection (“IMCO”) and Legal Affairs (“JURI”), insists that services, as well as digital content, should be included.  These “services” include cloud storage, social media and video sharing sites.  The report also proposes new provisions that would allow for broader national variations in the implementation of the Directive.  See the Commission’s proposal here, and the draft parliamentary report here.

On November 23, the European Commission announced that it is creating a task force to regulate drones.  This task force will introduce a framework for managing lower air space.  Its main objective is to organize and speed up the development of the “U-Space”—the lower airspace, between the ground and 150 meters in altitude—in urban environments, to be used by individuals and businesses to operate drones at lower levels. See the Commission’s press release here, and the speech of Commissioner Bulc announcing the task force here.

In November, it also emerged that three French groups—the Quadrature du Net, the French Data Network and the Fédération FDN—have now also launched a procedure before the Court of Justice of the EU to annul the Privacy Shield arrangement.  This challenge, filed October 25, comes after Digital Rights Ireland launched a similar challenge (Case T-670/16, see here), as outlined our EU Policy Update of November 2, 2016 (see here).  See the public filing for Case T-738/16 here, and the applicants’ submissions here (in French).

On December 1, the European Parliament granted its consent to the EU-U.S. Umbrella Agreement on data protection.  The Umbrella Agreement was signed in June 2016, but still required the consent of the European Parliament.  The agreement establishes a framework for the protection of data exchanged and processed by law enforcement authorities.  For instance, it contains provisions relating to purpose and use limitations on data transferred, data quality and integrity, rules on onward transfer, the right to access and rectification, and judicial redress and enforceability.  However, it does not provide a legal basis for data exchanges between private entities or between national security authorities.  See the Commission’s press release here, and Q&A here.

On December 6, 2016, the European Commission approved the acquisition of LinkedIn by Microsoft. The deal was approved conditional on compliance with a series of commitments in the European Economic Area for a period of five years. These commitments include: ensuring that PC manufacturers and distributors would be free not to install LinkedIn on Windows PCs and allowing users to remove LinkedIn from Windows PCs should PC manufacturers and distributors decide to preinstall it; allowing competing professional social network service providers to maintain current levels of interoperability with Microsoft’s Office suite through the Office add-in program and APIs; and granting competing professional social network service providers access to “Microsoft Graph”, a gateway for software developers. See the European Commission press release here, and the case file here.

Discussions also continued in the Council on potential restrictions on encryption.  In September, the Slovak Presidency of the Council distributed a questionnaire to all Member States to gauge their views and identify the obstacles faced by law enforcement authorities when gathering or securing encrypted e-evidence for the purposes of criminal proceedings (see the Polish response to the Presidency’s questionnaire here).  On the basis of the information gathered, the Presidency has now prepared a summary of positions.  We understand that a number of Member States have asked for legislation to help law enforcement authorities access encrypted information and share data with investigators in other countries, and for a legal obligation to build in backdoors in encrypted software.

In a parallel development, in November, the French and German Justice Ministers sent a second letter to the European Commission seeking to reinforce the legal obligation of electronic communication service providers to cooperate with authorities conducting criminal investigations in Member States.

The Council will now discuss the Member States’ positions, and the Franco-German proposal, at the Justice and Home Affairs Council on December 8 and 9, 2016.

We understand that the Article 29 Working Party—a group comprised of representatives of the national data protection authorities, the European Data Protection Supervisor, and the European Commission—will release three separate guidelines on the General Data Protection Regulation by the end of the year, with more to follow in 2017.  The upcoming guidelines will be for data protection officers within companies and organizations; portability guidelines, explaining how data can be reused; and guidelines on the designation of the lead authority for challenges to multinational companies.  The Article 29 Working Party plan to adopt the three texts at their next plenary, on December 12 and 13, 2016.  The General Data Protection Regulation will enter into force on May 25, 2018.

Looking further forward, a first draft of a European Parliament report examining the need for regulation of online platforms, currently being prepared by Finnish Member of the European Parliament (“MEP”) Henna Virkkunen (of the center-right European People’s Party, “EPP”, see here) and French MEP Philippe Juvin (also of the EPP, see here) is expected at the end of February 2017.

Communication and Media Policies

On November 28, the Council adopted its “general approach” on the Commission’s geo-blocking proposals.  Some Member States had felt that the proposals lacked legal clarity (particularly on the scope of application), and the freedom of traders to make available country-specific offers.  There was also some controversy over competition (antitrust) provisions which seek to change rules on the distribution of goods, which could affect luxury brand industries in the EU.  The Council must now wait for the European Parliament to finalize its position, expected in mid-2017.  See the Council’s press release here, and its general approach here.

The European Commission’s plans to reform the EU copyright regime (see the Commission’s Communication here, and the draft Directive here) are now being discussed in the European Parliament.  Maltese MEP Therese Comodini Cachia (EPP, see here) is the co-rapporteur for the European Commission’s copyright proposals.  She plans to hold two public hearings, one focused on press publishers, and another addressing intermediary liability (such as Content ID) and other aspects relating to internet platforms.  A draft report will be finalized by the end of February.  It will then be discussed in the Committee on Legal Affairs (“JURI”), and should be voted on in a plenary session of the European Parliament by the end of June 2017.

Energy and Environment Policies

On November 23, the Court of Justice of the European Union (“CJEU”) upheld a broad interpretation of the concept of “information that relates to emissions into the environment” that EU and Member State authorities (e.g., ECHA, EFSA, Commission, national environmental agencies) must disclose to the public.

According to the CJEU, the information that must be disclosed does not only relate to emissions from industrial installations, but must also include data allowing the public to: (i) know what is, or may be foreseen to be, released into the environment under normal or reasonable conditions of use of a product or substance; (ii) check the correctness of the assessment of the actual or foreseeable emissions on the basis of which product or substance is authorized; and (iii) understand the effect of those emissions on the environment.  This information must be disclosed to the public, upon request, even if it may affect the commercial interests of companies.

The Court came to this conclusion in two cases (C-673/13P and C-442/14) concerning Regulation 1367/2006 on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters to Community Institutions and Bodies (“Aarhus Regulation”) and Directive 2003/4/EC on Public Access to Environmental Information (the “Directive”).  The Court seemed to base its interpretation on the view that the Aarhus Regulation and the Directive have the general objective of allowing the disclosure of environmental information as widely as possible.

The CJEU’s decisions will have a significant impact on all companies that are required to submit regulatory filings to access the EU market under various EU regulatory regimes (e.g., chemicals subject to REACH, Biocides, Plant Protection Products, Fertilizers, GMOs) because individuals, NGOs and competitors will have easier access to the data submitted by these companies.  For Covington’s full analysis, please see the Inside Energy & Environment blog post on this topic by Cándido García Molyneux and Luca Tosoni, available here.

On November 30, 2016, the European Commission released its “Clean Energy Package”, an extensive package of proposals to drive a “clean energy transition” in the EU, and help it meet its climate change and clean energy targets for 2030 (as to which, see further here)—including a 40% cut of CO2 emissions, a share of 27% for renewable energies, and energy savings of 30%.  The package covers a broad range of policy areas, including renewable energy and energy efficiency.  The Commission proposes revisions to various Directives—including on Renewable Energy (see here, and a 2009 Covington e-Alert on the same here), Energy Efficiency (see here), Energy Performance of Buildings (see here), and Electricity (see here)—and the Electricity Regulation (see here), as well as several new product-specific measures on ecodesign.

The package presents both opportunities and challenges for energy-related industries, as well as for information technology companies whose technologies will help achieve Europe’s energy efficiency objectives.  The Commission’s announcement launches a legislative process that will normally take at least 18 months; however, it is notable that the upcoming Maltese Presidency of the Council of the EU has indicated that the revision of the Energy Efficiency Directive will be a priority (see here).  This package will offer industry opportunities to influence the legislation on renewable energy and energy efficiency that will apply in the EU as of 2021.  See the Commission’s press release, with links to each of its specific proposals, here.  For Covington’s full analysis, please see the Inside Energy & Environment blog post on the “Clean Energy Package” by Cándido García Molyneux and Luca Tosoni, available here.

Internal Market and Financial Services Policies

On November 14, the Commission launched a Task Force on Financial Technology (“FinTech”) that aims to foster innovation and address potential challenges that FinTech poses.  Co-chaired by the Directorates General for Financial Stability, Financial Services and Capital Markets Union (“DG FISMA”), and for Communications Networks, Content & Technology (“DG CONNECT”), the Task Force brings together the expertise of Commission staff across a variety of areas—such as financial and digital services, digital innovation and security, and competition and consumer protection.  Additionally, Roberto Viola, Director General of DG CONNECT, and Olivier Guersent, Director General of DG FISMA, in the Commission blog post that announced the Task Force, noted that the group will engage with outside experts and stakeholders.  The task force is meant to formulate policy recommendations for the sector over the course of 2017.  The Commission did not however clarify whether full-fledged regulation is a possibility in the near future.  See the Commission blog post announcing the Task Force here.

On November 22, the European Commission presented a proposal for a Directive on insolvency procedures and restructuring.  This proposal aims to offer more opportunities for businesses facing financial difficulty to restructure early on, in order to prevent bankruptcy and avoid laying off staff.  The Commission believes that a significant number of businesses, when faced with financial uncertainty, will resort to liquidation rather than early restructuring.  The proposed directive focuses on three key elements: (i) common principles across Member States on the use of early restructuring frameworks, (ii) rules to allow entrepreneurs to benefit from a second chance, and (iii) targeted measures to increase the efficiency of insolvency.  According to the Commission, the implementation of efficient restructuring procedures will prevent business from defaulting on their loans and will therefore also help address the issue of non-preforming loans in the EU.  See the proposal here.

On November 23, the Commission presented a comprehensive reform package to further strengthen the resilience of EU banks.  These proposals are part of the EU’s strategy as set out in its November 24, 2015 Communication on the Banking Union (see here).  They build on existing EU banking regulations, as well as on measures put in place since 2007 in response to the global financial crisis.  The proposals would amend four pieces of EU legislation: the 2013 Capital Requirements Regulation (“CRR”, see here) and Directive (“CRD”, see here); and the 2014 Bank Recovery and Resolution Directive (“BRRD”, see here) and Single Resolution Mechanism Regulation (“SRMR”, see here).  Among other things, the proposals amend capital requirements for EU banks to support their lending capacity for SMEs and infrastructure projects.  In addition, they seek to lessen the burden of capital requirement rules on smaller institutions.  These legislative proposals will now be submitted to the European Parliament and to the Council for their consideration and adoption.  See the Commission’s press release here, Q&A here, and the texts of the legislative proposals to amend the CRR here (and annex to the same here); to amend the CRD here; to amend the BRRD here and here; and to amend the SRMR here.

Life Sciences and Healthcare Policies

On November 18, the European Centre for Disease Prevention and Control (“ECDC”) published a report that provides guidelines to public authorities to address the fall of last-line antibiotics.  “Last-line antibiotics” are antibiotics that fight bacteria resistant to all other antibiotics.  Alongside five specific recommendations for Member States’ health systems, the ECDC emphasizes the importance of the “One Health” approach in ensuring a close cooperation between human and veterinary medicines, to reduce the use of last-line antibiotics in food-producing animals.  See the ECDC’s Policy Briefing here.

On November 23, the European Commission and the Organization for Economic Co-operation and Development (“OECD”) published their joint report “Health at a Glance: Europe—State of Health in the EU Cycle”.  This report helps EU Member States shape their initiatives across all healthcare sectors to address present-day challenges.  The report highlights the need to enhance knowledge of and access to national and cross-border healthcare systems.  The Commission and OECD also urge EU Member States to lower the financial barriers to healthcare and improve access to primary care.  The report stresses that there is a need to rethink how to promote and provide both better healthcare—including through the use of innovative means, such as eHealth—and better spending on drugs—by, for instance, promoting the use of generic medicines.  See the full report here, an executive summary here, and the Commission press release here.

Also on November 23, the European Commission opened a public consultation aimed at evaluating whether it is achieving the objectives of the Third Health Program.  The consultation is part of the program’s mid-term evaluation.  The program’s objectives include: supporting cooperation between EU Member states; reducing inequalities in healthcare; fostering health innovation; enhancing the surveillance of, and the means and methods to fight, cross-border health threats; increasing the use of evidence-based practices within EU Member States; and setting up a European Reference Network (to help experts in various Member States share their knowledge, to fight cross-border health threats more effectively).  The consultation runs until February 23.  To provide comments, see here; and find a factsheet on the Third Health Program here.

Trade Policy and Sanctions

On November 22, the Council of Ministers of the EU and the European Parliament reached a final agreement on the European Commission’s proposals for conflict minerals imported into the EU.  As we reported in our EU Policy Update of July 13, 2016 (see here), an agreement in principle had been reached in June on the key elements of the draft regulation, but some more detailed work was needed to reach a comprehensive text.  The key points agreed in November include that:

  • the new regime will be applicable as from January 2021;
  • the Regulation’s reporting obligations will only apply to smelters and refiners inside the EU;
  • the legislation will be “reviewed” after 2 years;
  • the co-legislators agreed an exemption from the obligation to report for importers of up to 100 kilograms of gold, alongside a close monitoring of the gold market, to mitigate any negative side effects; and
  • existing industry control schemes will be used, to avoid double burdens, but they will be regularly checked, to ensure continued respect of OECD standards on conflict minerals.

For Covington’s full analysis of the political agreement reached in June 2016, please see the Global Policy Watch blog post on this topic by Jean De Ruyt, Witney Schneidman and David Engvall, available here.

November saw three separate discussions of the free trade agreement between the EU and Canada (“CETA”), signed on October 30, in the European Parliament. The Parliament must give its assent to the agreement before its provisional implementation can take place. On November 23, the Parliament rejected a proposal, tabled by 89 MEPs from five political groups, to request an opinion of the Court of Justice of the EU on the compatibility or CETA with the EU Treaties. However, on November 28, following pressure from these same groups, the International Trade Committee agreed to postpone its vote on CETA to January 24, 2017, and the Parliament’s plenary vote to February 1 or 2, 2017. This would still allow provisional implementation by March 1.