A fresh breeze from Brussels: The future EU Commissioners in the areas trade, competition and digitalization

The President-elect of the European Commission, Ursula von der Leyen, presented on Tuesday September 10^th her new team and the structure of the next Commission. We took a closer look at the designated commissioners and the anticipated developments in the fields of trade, competition and digitalization.

Trade

In the new Commission, the Trade portfolio will be covered by Irishman Phil Hogan who until now held the office of Commissioner for Agriculture. Von der Leyen presented him as a fair but determined negotiator. His role will be particularly significant for the post-Brexit era and the conclusion of a trade agreement between the EU and the United Kingdom. His appointment is remarkable considering the interests of Ireland in the process of leaving the EU. Hogan is extremely critical of British Prime Minister Johnson's approach to Brexit and accused him of "gambling" with the peace process in Ireland.

Important tasks for Hogan will consist of promoting the reform of the World Trade Organization and protecting Europe from unfair trade practices. A new system for screening foreign direct investments is to be created and negotiations with China about a comprehensive investment agreement are to be completed. The trade relation with the United States is supposed to be designed in a more balanced and mutually beneficial way. However, Hogan will also need to react in case US-President Trump continues to threaten or even puts into practice punitive tariffs on European automobiles. The probable imminent paralysis of the WTO dispute settlement system as of December 2019 is a good reason for an overhaul of the Regulation (EU) No 654/2014 concerning the exercise of the Union's rights for the application and enforcement of international trade rules. In that way, punitive tariffs against countries sabotaging the WTO will become feasible. On the other hand, the exclusion of non-EU-enterprises from tenders of government contracts is being discussed.

While the free trade agreements with Australia and New Zealand have to be finalized, the long-term objective of a free trade area between Africa and the European Union is on the horizon. For European investors a transparent and predictable legal framework for projects in Africa is to be created, in consideration of a sustainable development and the EU's value based approach. Furthermore, it is envisaged to link the reduction of trade barriers to actions against climate change and for a sustainable development, for example through the introduction of a "Carbon Border Tax". It remains to be seen how the European Union will be able to position itself “between” Washington and Beijing.

Competition and Digitalization

Margrethe Vestager, already an important character in the Juncker commission, will remain to oversee the Competition portfolio as well as the digital dossier and have a prominent role as second Executive Vice-President. In the past she attracted attention for positioning the EU against American tech-giants and for imposing penalty payments running into billions against Google in particular due to infringements of competition law.

Likewise, Ms Vestager is asked to focus on the compliance with competition rules and to improve their enforcement in the future. The detection and examination of infringements of competition law is planned to be accelerated, inter alia through cooperation with national competition authorities. Moreover, it is intended to find new ways and means against distortions of competition through companies controlled and subsidized by non-member countries.

Three of the current group exemption regulations will expire during the next term of office. An examination of the vertical group exemption regulation has already begun in 2018. It exempts certain agreements and conduct from the application of the rules on competition. It is to be expected that the regulation's revision will especially take into greater account the new challenges in e-commerce and online platforms. With regard to sector inquiries, meaning the inquiry in economic branches or sectors for detecting infringements of competition law, it has to be mentioned that the beginning of a new term of office is also suited for the introduction of new inquiries which take about two years. Possible areas to be examined are mobility, the internet of things as well as data intensive industries. After prohibiting the merger of Siemens’ and Alstom’s train activities in February 2019 through Ms Vestager, the introduction of a ministerial approval procedure, similar to the German model, is also under discussion.

In the area of EU State aid schemes the Juncker commission already strived for a modernisation. Some rules will expire by the end of the year 2020 and will be partly extended, partly overhauled. For the group exemption regulation, an extension of the regulation on the use of national resources is expected.

In addition to her role as Commissioner for Competition, Ms Vestager is designated for the post of a vice president to make Europe fit for the digital age. Investments in technologies such as 5G-Networks, Blockchain and high performance computers will help Europe to move forward in digitalization. A concept for a European digital tax is also intended for the next term of office.

Vestager is however not the only relevant person for answering the questions of digitalization. At her side, the designated Commissioner for the Internal Market, the French Sylvie Goulard, former French defense minister and vice president of the Banque de France, will also have a great influence on these questions. The responsibilities of the internal market portfolio have been expressly enlarged into this area. Ms Goulard and Ms Vestager are already estimated to be a strong team for the field of digitalization.

It is von der Leyen’s "mission letter" to Ms Goulard that mentions for the first time officially a "Digital Services Act" that is meant to uniformly regulate the online-distribution of services and to replace the e-commerce directive. This includes a possible enhancement of online platforms' responsibility for content uploaded by users. Moreover, Ms Goulard is entrusted with working on other aspects of digitalization such as the overseeing cybersecurity and the development of a digitalization action plan in education.

Ms Vestager and Ms Goulard are also instructed to define within their first 100 days in office a common approach to the topic of artificial intelligence, in particular with regard to the question how non-personalized Big Data can be used for such technologies.

If you have any questions on this topic, please contact Dr Rainer Bierwagen and Ramona Tax.