Week Ahead (1 June)

Tuesday, 2 June – Eurostat to release flash inflation estimate for May ahead of key ECB rate decision in June

Early this week, Eurostat will publish its flash estimate for euro area inflation in May, providing one of the final major data points before the European Central Bank’s next Governing Council meeting on 11 June. The release is expected to play an important role in shaping expectations around whether the ECB proceeds with a precautionary rate increase in response to persistent inflation risks stemming from the Middle East energy shock.

The data comes after inflation accelerated again in April, with headline euro area inflation rising to 3.0% from 2.6% in March. The increase was broad-based, driven primarily by services and energy, with energy alone contributing almost one percentage point to the overall inflation rate. Food and non-energy industrial goods also continued to exert upward pressure, suggesting that price increases are no longer confined to a narrow set of categories.

The May release will therefore be closely scrutinised for signs of whether these pressures are becoming more entrenched. Attention will focus on services inflation, which remains the largest contributor to headline inflation, as well as the extent to which higher energy costs are beginning to filter more broadly through the economy via transport, logistics and food prices.

The inflation figures arrive against an increasingly difficult backdrop for policymakers. Although the ceasefire between Israel and Iran remains in place, there has been little progress towards a lasting settlement, while uncertainty surrounding the future of shipping through the Strait of Hormuz continues to keep energy markets on edge. At the same time, US-Iran negotiations have advanced only slowly, reinforcing concerns that elevated energy prices could persist for longer than initially anticipated. 

Importantly, minutes published yesterday from the ECB’s April meeting confirmed that the Governing Council adopted a notably hawkish stance despite ultimately leaving rates unchanged. The minutes revealed that several policymakers viewed the decision as a close call and “would not have opposed raising rates at the current meeting had this been on the table.” Policymakers also acknowledged that second-round effects from higher energy prices are likely to emerge over time, noting that the transmission of energy shocks to some consumer prices can take more than a year.

Since that meeting, inflation has continued to move higher while energy-related risks remain elevated. As a result, market participants increasingly view a June rate increase as a realistic possibility, with several ECB officials, including Isabel Schnabel, recently signalling concerns about maintaining inflation expectations firmly anchored around the 2% target. Therefore, this week’s release could prove influential in tipping the balance between maintaining the ECB’s current wait-and-see approach and the need to preserve the institution’s inflation-fighting credibility. 

Tuesday, 2 June – European Commission faces decision deadline on Carlyle-BASF coatings acquisition following remedy

Tomorrow marks the revised Phase I deadline for the European Commission’s review of Carlyle’s proposed €7.7 billion acquisition of BASF’s coatings business, following the submission of remedies by the US private equity group earlier this month. The commitments prompted DG COMP to extend its initial review timetable and suggest that the transaction may face more substantive competition concerns than originally anticipated.

Announced in October 2025, the deal would see Carlyle acquire a majority stake in BASF’s automotive OEM coatings, automotive refinish coatings and surface treatment activities, while BASF would retain a 40% minority shareholding in the carved-out business. The transaction forms part of BASF’s broader portfolio optimisation strategy as the German chemicals group continues to restructure operations amid challenging industrial and manufacturing conditions across Europe.

Importantly, the case has already passed through one layer of EU scrutiny. Earlier this year, the Commission cleared the transaction under the Foreign Subsidies Regulation (FSR) without opening an in-depth investigation, despite attention surrounding the involvement of the Qatar Investment Authority (QIA) and the Commission’s increasing focus on sovereign-backed capital. That approval suggested limited concerns regarding potential distortions arising from foreign state support or preferential financing arrangements.

Although the Commission has not publicly disclosed the precise nature of either its concerns or Carlyle’s proposed commitments, the review has centred on activities within automotive coatings and specialised surface-treatment markets, including applications involving metals, plastics and glass. Brussels has also conducted market testing of the proposed remedies among customers and competitors. At this stage, the most likely outcome remains a conditional Phase I clearance incorporating commitments offered by Carlyle.

Wednesday, 3 June – European Commission to unveil tech sovereignty package, seeking to reduce dependence on US cloud, AI and semiconductor infrastructure

This week, the European Commission is expected to unveil its long-delayed European tech sovereignty package, centred on a new Cloud and AI Development Act and a proposed revision of the European Chips Act. 

The initiative comes against the backdrop of growing concern in Brussels and several member states over Europe’s reliance on US-controlled digital infrastructure. According to draft elements reported in recent days, the Commission is expected to argue that the EU remains around 80% dependent on foreign technology providers, while Amazon Web Services, Microsoft Azure and Google Cloud together control more than 70% of the European cloud market.

At the centre of the package will be the Cloud and AI Development Act, which is expected to seek a major acceleration of European data-centre capacity, with the aim of tripling EU capacity over the next five to seven years. The Commission is likely to propose simplified and more harmonised procedures for data-centre deployment, while also linking the expansion of cloud and AI infrastructure to energy-efficiency and sustainability requirements, reflecting growing concerns over electricity and water demand from data centres.

A second key element is expected to concern “sovereign” cloud and AI systems. According to leaked draft elements, public authorities may be required to carry out sovereignty risk assessments and identify European alternatives where sensitive data or critical public functions are involved. Brussels is also expected to define different levels of cloud sovereignty in an effort to avoid so-called “sovereignty-washing,” where foreign-controlled providers offer localised services without meaningful European control over infrastructure, supply chains, cybersecurity, data processing or AI model development. This could benefit European players such as OVHcloud, SAP, Mistral and other emerging cloud and AI providers, particularly if public procurement becomes a stronger demand-side tool.

The second major pillar of the package will be the proposed revision of the European Chips Act. The original 2022 Chips Act aimed to double the EU’s share of global semiconductor production capacity to 20% by 2030 and mobilise large-scale public and private investment. While it helped unlock significant state aid, including major projects in Germany, Italy and Austria, overall investment has fallen short of the roughly €80 billion initially envisaged.

The revised Chips Act is therefore expected to focus less on headline targets and more on addressing bottlenecks in demand, permitting, eligibility and supply-chain resilience. The initiative is also expected to respond to recent concerns around foreign control of semiconductor assets and supply-chain disruptions, including the fallout from the Nexperia case.

More broadly, the package reflects a growing recognition in Brussels that asymmetric dependence can translate into geopolitical vulnerability. For years, the EU assumed that deep economic integration with the US would reinforce stability. Recent tensions have instead strengthened concerns that dependence on US-controlled cloud, AI infrastructure and digital platforms could constrain Europe’s room for manoeuvre in trade, sanctions, security and industrial policy.

Wednesday, 3 June – General Court to rule on Meta’s challenge to DMA gatekeeper designations for Messenger and Marketplace

On Wednesday, the General Court, the EU’s lower court, is expected to deliver its judgement on Meta’s challenge (T-1078/23) to the European Commission’s decision to designate Facebook Messenger and Facebook Marketplace as core platform services under the Digital Markets Act (DMA), in what will be another important judicial test of the EU’s flagship digital competition regime.

The case dates back to November 2023, shortly after the Commission designated six technology companies as DMA “gatekeepers”: Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft, with Booking.com following suit in 2024. Under the DMA, companies exceeding certain thresholds relating to turnover, market capitalisation and user numbers are subject to a range of obligations aimed at limiting anti-competitive conduct and ensuring fair access to digital markets.

Although Meta accepted the designation of its core social networking services (Facebook, Instagram, WhatsApp), it challenged the inclusion of Messenger and Marketplace, arguing that the Commission had failed to properly assess the nature of those products. In particular, Meta has maintained that Messenger is not a standalone platform but is “technically and functionally” integrated into Facebook itself and therefore should not be treated as a separate core platform service under the DMA framework.

The ruling follows the General Court’s 2024 landmark judgement in ByteDance’s challenge against TikTok’s designation as a gatekeeper. In that case, the General Court largely sided with the Commission, concluding that Brussels was entitled to rely on the DMA’s quantitative thresholds and broader market position indicators when determining gatekeeper status. Although the Court identified certain errors in the Commission’s assessment, it ultimately held that these did not affect the legality of the designation decision. That ruling was widely interpreted as a significant endorsement of the Commission’s discretion in applying the new regime and established an important early precedent for subsequent DMA litigation. As a result, Meta could face an uphill battle in overturning the designations.

The judgement will also have broader implications beyond Meta itself. Apple is pursuing similar legal challenges against the designation of several of its services, including the App Store, Safari and iOS, while other gatekeepers continue to contest various aspects of DMA implementation and enforcement. A ruling that broadly upholds the Commission’s approach would further strengthen the legal foundations of the DMA at a time when Brussels is simultaneously intensifying enforcement against designated gatekeepers, including ongoing investigations into Google and Apple.

Wednesday, 3 June – General Court to rule on challenge to Commission’s investigative powers in Vivendi-Lagardere gun-jumping probe

Also on Wednesday, the EU General Court is expected to rule on Case T-1119/23, brought by Vivendi and Lagardere against the European Commission in one of the most closely watched merger-enforcement disputes currently before the EU courts.

The case forms part of the Commission’s broader investigation into whether Vivendi exercised influence over Lagardere before obtaining the necessary merger approvals, in potential breach of the EU Merger Regulation’s notification and standstill obligations. However, the litigation before the General Court does not concern the substance of the alleged gun-jumping conduct itself. Instead, it focuses on the legality of the Commission’s investigative measures and the scope of its powers when gathering evidence during merger investigations.

More specifically, Vivendi and Lagardere have challenged requests for information and document collection measures issued by DG COMP, arguing that certain demands risked infringing protections relating to journalistic sources, editorial independence and media confidentiality. The dispute therefore sits at the intersection of merger enforcement, fundamental rights and media freedom, making it unusually sensitive compared to more conventional competition cases.

The ruling comes against the backdrop of the Commission’s wider probe into Vivendi’s takeover of Lagardere. In July 2025, Brussels issued a Statement of Objections setting out its preliminary view that Vivendi may have prematurely implemented aspects of the transaction before receiving full regulatory clearance. According to the Commission, the company may have exercised “decisive influence” over Lagardere during key stages of the acquisition process, including involvement in editorial decisions, programming choices and certain management matters. Vivendi has consistently denied the allegations.

The Commission subsequently reinforced its concerns during a closed hearing last December, pointing to internal communications, including deleted emails and the use of disappearing-message applications, as potential indicators of coordination occurring before formal approval. A final infringement decision could ultimately expose Vivendi to fines of up to 10% of its global annual turnover.

While this week’s judgement will not determine whether Vivendi breached merger-control rules, it could nevertheless have important implications for future investigations. A ruling broadly supporting the Commission would strengthen DG COMP’s ability to obtain internal communications and pursue evidence in complex gun-jumping cases, particularly where concerns arise around behavioural influence rather than formal ownership control. Conversely, a judgement imposing limits on the Commission’s investigative powers could constrain future enforcement in sensitive sectors such as media, publishing and communications.