At the beginning of a new year, we are looking ahead to five key technology trends in the EMEA region that are likely to impact businesses in 2023.

1. Technology Regulations across EMEA

European Union

If 2022 was the year that the EU reached political agreement on a series of landmark legislation regulating the technology sector, 2023 will be the year that some of this legislation starts to bite:

  • The Digital Services Act (DSA): By 17 February 2023, online platforms and online search engines need to publish the number of monthly average users in the EU. Providers that are designated as “very large online platforms” and “very large search engines” will need to start complying with the DSA in 2023, and we may start to see Commission investigations kicking off later in the year too.
  • The Digital Markets Act (DMA): The DMA starts applying from 2 May 2023. By 3 July 2023, gatekeepers need to notify their “core platform services” to the Commission.
  • The Data Governance Act (DGA): The DGA becomes applicable from 24 September 2023.

Also this year, proposals published under the European Data Strategy—such as the Data Act and European Health Data Space—and EU legislation targeting artificial intelligence (AI) systems—including the AI ActAI Liability Directive and revised Product Liability Directive—will continue making their way through the EU’s legislative process. These legislative developments will have a significant impact on the way that businesses ingest, use and share data and develop and deploy AI systems. In addition, the new liability rules will create potentially significant new litigation exposure for software and AI innovators.

Continue Reading Top Five EMEA Technology Trends to Watch in 2023

The European Parliament and Council are about to formally adopt a General Product Safety Regulation (“GPSR”), which will repeal and replace the General Product Safety Directive 2001/95 (“GPSD”)Just like the GPSD, the GPSR sets out the basic rules on the safety of products placed on, or made available in, the EU market and intended for, or likely to be used by, consumers.  While the GPSR builds on the existing legal framework of the GPSD it introduces several changes and new requirements that aim to enhance the protection of consumer’s health and safety, and adapt its requirements to new technologies.

This blog post outlines 16 changes and new requirements that the GPSR introduces and that industry should carefully take into consideration.

Changes Introduced by the GPSR

The GPSR will introduce the following 16 changes:

Continue Reading Sixteen Changes of the Upcoming EU General Product Safety Regulation

Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market (FSR) entered into force on 12 January 2023 and will start to apply as of 12 July 2023.

The FSR creates a brand new instrument to fill a regulatory gap, by preventing foreign subsidies from distorting the European Union (EU) internal market. Whereas companies receiving public support in the EU are subject to strict State aid rules, companies obtaining public support outside the EU are generally not. This was perceived as putting companies in the EU at a disadvantage compared to companies that obtained subsidies outside the EU, but that also engaged in economic activity in the Union.

The FSR’s scope extends far beyond the obvious State support, to cover common types of benefits that are granted all over the world, including in countries driven by a market economy. Its obligations will inevitably place an additional administrative burden on companies engaging in an economic activity in the EU. Acceptance of a foreign subsidy distorting the EU internal market may have far-reaching consequences for the company. The FSR places additional compliance obligations on companies, and for many will entail a thorough assessment to identify and justify foreign subsidies received. For companies considering transactions in the EU, the FSR effectively creates a third layer of deal conditionality, besides merger control and Foreign Direct Investment laws. This is adding a further unique set of thresholds, timings and factual considerations, to be included in companies’ strategies to invest in the EU. This will require expertise in EU antitrust and State aid law, and a good understanding of the details of the FSR.

Key things you need to know:

Continue Reading The EU Foreign Subsidies Regulation enters into force

A Re-cap

The Good Friday Agreement (GFA)

The 1998 GFA brought an end to the 30 years of violent sectarian strife, euphemistically known as ‘The Troubles’. The GFA was carefully constructed so as to balance the competing positions of both communities and to remove all infrastructure on the border between N and S Ireland.  Importantly, it also created a power-sharing system in N Ireland, with the largest political party appointing the First Minister and the second largest party appointing the Deputy First Minister. 

The GFA was ‘guaranteed’ by the UK and the Republic of Ireland both being members of the EU and therefore subject to the same trading and legal arrangements. When the UK left the EU, it became necessary to work out a new arrangement for Northern Ireland which did not risk re-creating a border between N and S Ireland, but still enabled the UK as a whole to be treated as a third-country outside the EU.

The Northern Ireland Protocol (NIP)

A third country outside the EU requires a land border. The solution to squaring this complex and sensitive this circle (one of the most difficult elements of the UK’s departure from the EU, along with the status of Gibraltar) was The Northern Ireland Protocol (the NIP), an integral part of the broader Trade and Cooperation Agreement between the UK and the EU (The TCA).

The NIP allows N Ireland to remain in the EU Single Market, but takes it out of the Customs Union.  This deliberate fudge imposes the requirement to carry out checks on goods coming from GB to N Ireland to  avoid them entering the EU’s Single Market via the ‘back door’ of N / S Ireland trade.  Since the GFA means there can be no infrastructure on the N/S Ireland Border, those controls have to be carried out ‘in’ the Irish Sea – in practice on arrival of goods in N Ireland.

Continue Reading The Northern Ireland Conundrum: A Path Forward?

In 2022, the European Union announced the creation of Digital Partnerships with three Asian countries: Japan, South Korea and Singapore. This is in line with the EU’s Digital Compass strategy which seeks to make the European Union the most connected continent by 2030. The European Commission is expanding its connections between Europe and the rest of the world to address the digital divide and further develop a sustainable digital economy with trusted partners.

Below we set out the key points from the Digital Partnerships that the European Commission has announced with Japan, South Korea and Singapore, respectively.

EU-Japan Digital Partnership

During the EU-Japan Summit organised on May 12, 2022, the European Union and Japan concluded the EU-Japan Digital Partnership, the first digital cooperation initiative to advance economic growth and provide a safe and inclusive space to solve digital issues. This effort furthers the “Data Free Flow with Trust” agenda, aimed at facilitating safe and secure cross-border data flows.

The EU-Japan Partnership will also focus on the following areas:

  • 5G/6G technologies;
  • Ethical considerations for Artificial Intelligence (“AI”);
  • Global supply chains in the semiconductor industry;
  • Green data infrastructures and data innovation;
  • Development of digital skills for private and public sectors; and
  • Facilitation of digital trade and application of global interoperable standards.

As part of the common vision, the Digital Partnership identified a number of key action items, as follows:

  • Collaborating on the development of innovative technologies through research;
  • Implementing concrete pilot projects in cutting-edge areas such as AI and digital identity;
  • Establishing mechanisms for international collaboration and common approaches to digital transformation; and
  • Developing common principles and rules through regulatory cooperation on key technology enablers for digital trade.

All the above will reflect the highest standards of data protection and follow the objectives set out by the EU-Japan mutual adequacy arrangement. The implementation of the EU-Japan Digital Partnership will start in 2023 and the countries will review their targets and progress on an annual basis.

EU-South Korea Digital Partnership

On November 28, 2022, the European Union and the Republic of Korea launched a new Digital Partnership to boost the cooperation between the two countries in the digital field. This collaboration will mainly focus on:

  • Semiconductors;
  • Next generation mobile networks;
  • Quantum technology;
  • High Performing Computing (“HPC”);
  • Cybersecurity;
  • AI;
  • Digital platforms and standardization; and
  • Data and digital skills.

The key action items from the EU-Korea Digital Partnership include:

  • Engaging in collaborative research activities, facilitating access to, and participation in, international standardisation relating to emerging technologies in the digital sector.
  • The sharing of information on: (i) cybersecurity threats and other aspects of cybersecurity, (ii) data-related laws and systems, which build on the existing adequacy decision that the European Commission granted to Korea (and ensuring data free flow of data between Korea and the EU) and working towards identifying commonalities between their existing regulatory approaches, (iii) views on a 6G roadmap and future 6G spectrum needs, (iv) the laws and systems aimed at the development and global use of trustworthy and human-centric AI (e.g., definitions, use cases, high risk AI applications, and response measures) and coordinating positions on AI governance, (v) platform policies, and (vi) approaches to protectionist measures in the digital space.
  • The Digital Partnership will also establish a Korea-EU forum for semiconductor researchers to (i) discuss and share information on the latest technologies and trends, (ii) identify gaps and potential disruptions to the global supply chain, and (iii) explore potential opportunities for international standardisation of trusted chips and chip security.

EU-Singapore Digital Partnership

The European Union and Singapore announced on December 15, 2022 a new partnership that will focus on the digital sector and its issues. The EU-Singapore Digital Partnership will be formally signed and launched in 2023 and aims at reinforcing existing relationships between the European Union and Singapore in the digital realm to achieve sustainable economic growth. The range of digital issues the collaboration will focus on are:

  • Trade facilitation;
  • Trusted data flows and data innovation;
  • Digital trust and standards;
  • Digital skills for workers;
  • Digital transformation of businesses and public services; and
  • Emerging technologies (e.g. 5G/6G, AI and digital identities).

In contrast to the other partnerships, the EU-Singapore Digital Partnership is the first one to agree on the development and application of Digital Trade Principles (“Principles”). These Principles are designed to provide a common framework for digital strategies, which will in turn be used contribute to the ongoing OECD discussions on establishing rules regarding electronic commerce.

What are the next steps?

In announcing these Digital Partnerships, EU Commissioner, Thierry Breton mentioned that these Digital Partnerships are likely to:

  • impact recent EU proposals, such as the EU Chips Act or AI Act; and
  • help achieve interoperability between the EU and Asia, as the EU Commission and ASEAN countries continue to cooperate in the digital space.

As mentioned above, all three Digital Partnerships will be formally launched in 2023. We expect that the Digital Partnerships will be used as a strategic pathfinder for closer region-to-region digital connectivity and to develop enhanced cooperation with other ASEAN countries such as Thailand, Malaysia, among others.

If you would like to learn more about these Digital Partnerships, or how Covington could help you participate in related policy initiatives, please do not hesitate to contact us.

Continue Reading EU Digital Partnerships with Asia: A New Path Towards Enhanced Digital Collaboration and Opportunities

On December 28, 2022, the Spanish Data Protection Authority (“AEPD”) published a statement on the interplay between its recently approved Spanish code of conduct for the pharmaceutical industry and the European Federation of Pharmaceutical Industries and Associations’ (“EFPIA”) proposal for an EU code of conduct on clinical trials and pharmacovigilance.  The statement relates specifically to

Last week the European Commission published its long-awaited proposal for a Packaging and Packaging Waste Regulation (“proposed Regulation”), and a Communication on an “EU Policy Framework on Biobased, Biodegradable and Compostable Plastics” (“Communication”).  The proposed Regulation is intended to replace the Packaging and Packaging Waste Directive 94/62 (“Packaging Directive”) and to ensure that all packaging marketed in the EU/EEA is fully recyclable or reusable by 2030.  If adopted, the proposed Regulation’s new requirements and restrictions will have a significant impact on industry, distributors, and consumers.  The European Parliament and Council must now consider the proposed Regulation for adoption through the so-called “ordinary legislative procedure,” which will allow for the introduction of amendments and is likely to take at least 18 months.  

This blog post highlights the main changes and new requirements that the proposed Regulation would introduce, and outlines the principal recommendations of the Commission’s Communication.

Main changes introduced by the proposed Regulation

The proposed Regulation would introduce the following eight main changes:

1.         Adoption of a Regulation.  The first important change is that the EU legislation on packaging and packaging waste would take the form of a Regulation rather than a Directive.  This, together with the harmonization clause of Article 4 of the proposed Regulation and the inclusion of certain packaging items in the definition of Article 3, is intended to limit Member States’ attempts to impose additional requirements on packaging. 

2.         Ban on Certain Packaging Formats.  The proposed Regulation would also propose to ban single-use packaging formats, including single-use composite packaging (e.g., containers); single-use packaging for fresh fruits and vegetables; single-use plastic grouped packaging used to group cans, tubs, tins and pots together; single-use hotel miniature packaging (e.g., sachets around miniature bar soap); and single-use plastic and composite trays and boxes for foods and beverages in the HORECA sector (e.g., trays or boxes used to wrap hamburgers).

3.         Compostability Requirements.  The proposed Regulation would also require that particular categories of packaging (e.g., sticky labels attached to fruits and vegetables, very lightweight plastic carrier bags, and tea and coffee bags and single-serve units intended to be used and disposed of with the product) be “compostable in industrially controlled conditions in bio-waste treatment facilities.”  The proposed Regulation does not itself  define the criteria that these types of packaging must meet to be compostable.  However, its Impact Assessment states that companies may demonstrate the compostability of their packaging on the basis of existing EU harmonized standards, such as, e.g., Standard EN 13432:2000.  European authorities are also likely to take into account the compostability criteria for plastics of the Communication (see below).

The proposed Regulation would also empower the Commission to subject other packaging items to the obligation to be compostable through delegated acts if justified and appropriate due to technological and regulatory developments impacting the disposal of compostable packaging and if the packaging meets the criteria of Annex III.

Other types of packaging that are not subject to the compostability obligation mentioned above would have to be designed in a way that they can be recycled without affecting other waste streams (such as the bio-waste waste streams).  Contrary to earlier version of the proposal, the proposed Regulation does not seem to impose a general ban on compostable plastic polymers. 

4.         New Deposit and Return Schemes.  The proposed Regulation would require EU Member States to put in place deposit and return schemes for single-use plastic and metal beverage bottles of up to three liters (with the exception of wine, spirits and milk). 

In addition, the proposal would also require Member States to encourage the introduction of systems for the reuse and refill of packaging in an environmentally sound manner.

Continue Reading The Commission unveils its proposal for a Packaging and Packaging Waste Regulation, and provides recommendations on Biobased, Biodegradable and Compostable Plastics

On 19 October 2022, the European Commission (the “Commission”) adopted its new State aid Framework for research, development and innovation (the “2022 RDI aid Framework”). This instrument governs Member States’ investment in RDI activities. It is an important response to the 2020 Commission Communication on a new European Research Area for Research and Innovation (the “ERA Communication”), aiming at strengthening investments and reaching a 3% GDP investment target in the field of RDI. The 2022 RDI aid Framework is a revision of the previous version of 2014.

The three most important things you need to know about the 2022 RDI aid Framework are:

  • The Commission’s approval is subject to a set of criteria to determine whether the aid is justified and can be authorised, and compliance with recent EU objectives such as the EU Green Deal and the EU Industrial and Digital Strategies will have a positive influence on the Commission’s assessment;
  • RDI activities now explicitly include digitalisation and digital technologies; and
  • Member States can grant aid for testing and experimentation infrastructures which predominantly provide services to undertakings for R&D activities closer to the market.

Background

Similarly to its previous version, the 2022 RDI aid Framework recalls the instances where RDI aid does not qualify as a State aid and is therefore not caught by the State aid rules. This would be the case where the aid is granted to non-economic activities conducted by universities or where universities, although publicly funded, engage in RDI activities with companies pursuing commercial goals.

Continue Reading The Commission has revised its framework for State aid for research and development and innovation

During its 40-year membership of the EU, the UK incorporated many thousands of pieces of EU legislation (including swathes of employment, workers and environmental protection legislation introduced under the EU’s Social Chapter) into UK law.  To ensure a smooth transition when the UK left the EU, that legislation was swept across onto the UK Statute Book as ‘Retained Law’.  Since one of the arguments of the Leave campaign had been to ‘take back control’ of the UK’s legislation, it was only to be expected that Retained Law would eventually be inspected for the logic of keeping it in a UK outside the EU – not least since part of the purpose of EU legislation was to ensure legal conformity across a 28-nation trading bloc. 

Ideally, each piece of legislation would have been individually assessed to decide on its merit and value to the UK’s international competitivity and its compliance with international norms on climate change, environmental protection, human and employment rights etc.  Laws which met those requirements would then have been redrafted to suit the UK specifically: those which did not and which the UK outside the EU did not need would have been jettisoned after due consideration. 

The Bill…

Whilst it is widely accepted that a review and redraft of EU legislation is necessary and even logical for a UK outside the EU, concerns have been increasingly focused, not on the changes per se, but on the method that the government is planning to use to make those changes.

Continue Reading A Brexit Legislation Bonfire?

On 28 October 2022, the European Commission (the “Commission”) adopted the  second amendment to its Temporary Crisis Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia (the “Framework”). The second amendment to the Framework extends its duration by one year until 31 December 2023.

The four most important things you need to know about this amendment are:

  • Maximum aid amounts have been increased;
  • Guarantees or subsidised interests can now cover larger amounts of loans when taken by large energy utilities companies that provide financial collateral for trading activities on energy markets. Exceptionally, guarantees can also be provided as unfunded financial collateral directly to central counterparts or clearing members to cover the liquidity needs of energy companies, to clear their trading activities on energy markets;
  • To achieve the EU targets of reducing electricity consumption in response to high energy prices, Member States may provide compensation for genuine reductions in electricity consumption; and
  • State recapitalisations are not subject to detailed rules as under the COVID-19 Temporary Framework, however the Commission highlights the general principles it will use to assess them on a case-by-case basis. 


Continue Reading The Commission prolongs and amends its Temporary Crisis Framework relaxing State aid rules to support the economy following the aggression against Ukraine by Russia