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Week Ahead (10 June)

W/C Monday, 10 June – Informal talks on how to distribute the top European posts to kick off, following EU elections  

This week, informal talks between EU leaders on distributing top European posts are expected to begin, following the European elections. 


The European People’s Party (EPP) maintained its dominance with 185 of the 720 seats (up from 178). They regained momentum in countries like Estonia, Slovenia, and Germany, where the German conservatives won 30.2% of the vote. Spain’s Partido Popular and Poland’s Civic Coalition also contributed significantly, with 22 and 21 seats, respectively. The Progressive Alliance of Socialists and Democrats (S&D) remain the second-largest force with around 137 seats (down from 139). However, Germany’s SPD finished third with just 13.9%, its worst ever result. 


Centrist Renew Europe held its position as the third-largest group, despite losing over 20 seats, bringing their total to 80 (down from 102), largely due to defeats in France. The conservative ECR group and the far-right Identity and Democracy (ID) group secured 73 (up from 69) and 58 seats (up from 49), respectively, with contributions from Poland’s PiS (20 seats), Italy’s Brothers of Italy (22 seats), France’s Rassemblement National (30 seats), Austria’s FPO (6 seats) and the Dutch (6 seats). 


Despite far-right gains, the results did not dramatically alter the balance in the European Parliament, where centrist pro-EU parties (EPP, S&D, and Renew) continue to hold a majority. Ursula von der Leyen is likely to secure a second term as President of the European Commission with their support, totaling around 407 votes. However, potential defections could jeopardise her position. To secure her mandate, von der Leyen may seek support from the Greens or the ECR, which involves balancing delicate political alliances. 


Seeking support from the Greens, who have 52 seats (down from 71), could alienate some members of von der Leyen's own EPP, particularly those who are critical of certain provisions of the Green Deal. On the other hand, aligning with the right-wing ECR, could undermine support from the S&D and Renew groups, who may view such an alliance as a move away from pro-EU and progressive policies. This balancing act is crucial for von der Leyen to secure the necessary 361 votes in Parliament. 


From 13-15 June, at the G7 Summit in Apulia, Italy, EU leaders will have their first post-election discussions about these roles informally. The first official discussion will occur on 17 June at an informal European Council Summit in Brussels. These meetings will lay the groundwork for future negotiations, with the goal of agreeing on top positions at the European Council Summit on 27-28 June in Brussels. Key roles include the President of the Commission, the President of the European Council, the High Representative for Foreign Affairs, and the President of the European Central Bank. 


However, achieving a breakthrough will be challenging, given the need to balance political affiliations, geographic diversity, and gender representation. Between 16-18 July, the Parliament’s first plenary may vote on the Council’s nominee for Commission President. If rejected, the Council will have one month to propose an alternative, with a new vote in September. By 24 October, the Parliament is expected to confirm the new Commission. If not confirmed, the current Commission will continue in a caretaker role. 


Despite not fundamentally altering the balance of power in the European Parliament, the election results have significant impacts on several member states, including Germany and France. Marine Le Pen’s National Rally (RN) in France achieved 32% of the vote, prompting President Emmanuel Macron to dissolve the National Assembly and call for snap elections. The poor performance of Germany’s coalition partners has led to calls for Chancellor Olaf Scholz to also call for early national elections. 


Monday, 10 June – Final EU deadline for concessions for IAG-Air Europa €400 million merger deal 

In January 2023, IAG, the parent company of British Airways and Iberia, agreed to acquire the remaining 80% stake in Spanish low-cost airline Air Europa for €400 million. This marks IAG's second attempt at the deal, having abandoned a previous attempt in 2021 due to regulatory concerns. The acquisition is seen as a strategic move to enhance IAG's access to the Latin American market and position Madrid as a key European hub. However, concerns have been raised about the potential impact on ticket prices and competition on specific routes.    


Thus, in the absence of early remedies, the EU antitrust regulator opened in January an in-depth investigation (Phase 2) into the proposed deal. In its announcement in January, the Commission argued that the two companies ‘’are strong and close competitors in the provision of passenger air transport services on certain routes within, to, and from Spain’’.  Subsequently, in April, the two parties received a Statement of Objection from the Commission, reiterating its concerns that ‘’absent suitable remedies’’, the deal could lead to increased prices or worse service for consumers and businesses. IAG responded by expressing its willingness ‘’to transfer the equivalent of 40% of the flights operated by Air Europa in 2023 to other airlines’’. 


A recent study conducted by the German Institute for Economic Research on behalf of DG Comp indicated that reduced competition in the airline industry has resulted in higher prices for European passengers.  This is unwelcome news for firms like Lufthansa and ITA Airways, awaiting a decision on their planned deal by 4 July, and for IAG and Air Europa, which have until today to submit further concessions ahead of the ultimate deadline of 15 July. The Commission’s decisions next month will indicate the direction of its competition policy for such deals.   


W/C Monday, 10 June – European Commission likely to announce whether to allow Hedin Mobility Group’s acquisition of Iveco Group’s distribution and retail operations in the Nordics 

This week, the European Commission is likely to announce its decision on whether to allow Hedin Mobility Group’s acquisition of Iveco Group's distribution and retail operations in Sweden, Norway, Finland, and Denmark.   


Last December, the Hedin Mobility, one of Europe’s leading mobility providers, signed a Share Purchase Agreement with Iveco, a global automotive company with HQ in Italy, following their Letter of Intent from March 2023. More specifically, the agreement includes the transfer of marketing and distribution operations for Iveco light commercial vehicles, medium- and heavy-duty trucks, and minibuses through the retail network in the four Nordic countries, along with spare parts. The deal also encompasses the acquisition of the retail business at Iveco-owned dealerships in Sweden (Gothenburg, Helsingborg, and Malmö), Norway (Bærum), Finland (Espoo), and Denmark (Odense). Iveco Group’s commercial vehicle range is currently sold and serviced in the Nordics through 35 retailers and over 100 workshops. Overall, this transaction aims to fortify Hedin Mobility Group's position as a leading European mobility provider and expand Iveco's Nordic distribution network. 


The parties filed a notice of the proposed deal to the European Commission on 16 May. Although the Commission’s deadline for Phase 1 of the deal is on 21 June, a decision is likely this week. 


W/C, Monday 10 June – Date by which affected parties should be notified of tariffs on Chinese EVs 

Per previous reports, on 4 October 2023, the Commission published a notice of initiation of EU anti-subsidy investigations into EU imports of battery electric vehicles (BEVs) from China.  This is understood to have been driven mostly by Emmanual Macron.  


Under a notice of initiation, the investigation will be concluded within a maximum of 13 months of initiation. Any provisional anti-subsidy duties may be imposed by 9 months after initiation with affected parties to be given 4 weeks notice in advance of this.  Therefore, provisional tariffs, if agreed, should be implemented by 4 July which would mean affected parties should be notified by 6 June.  Any definitive measures would be imposed up to 4 months later – these would take the form of countervailing tariffs for 5 years and would need to be approved by a qualified majority of EU Member States.  


Germany appears to have succeeded in pushing for concessions which would see the Commission delay notification to affected parties until this week and therefore after the European Parliament election.  This seems legally dubious, as Article 29A of the legislation governing subsidised imports states that: 


“Union producers, importers and exporters and their representative associations, and the country of origin and/or export, may request information on the planned imposition of provisional duties. Requests for such information shall be made in writing within the time limit prescribed in the notice of initiation. Such information shall be provided to those parties four weeks before the imposition of provisional duties. Such information shall include: a summary of the proposed duties for information purposes only, and details of the calculation of the amount of the countervailable subsidy and the margin adequate to remove the injury to the Union industry, due account being taken of the need to respect the confidentiality obligations contained in Article 29. Parties shall have a period of three working days from the supply of such information to provide comments on the accuracy of the calculations.” 


There may be some leeway under Article 12.  This states that: 

“Provisional duties shall not be imposed within a period of three weeks after the information is sent to interested parties under Article 29a (period of pre-disclosure). The provision of such information shall not prejudice any subsequent related decision that may be taken by the Commission.” 


It remains to be seen whether the notification will come this week or not.  In any case, the Commission is expected to introduce provisional tariffs on Chinese EVs albeit not at a rate as high as their US counterparts.  Negotiations can then get underway in earnest as the Chinese will want to avoid these becoming permanent in November.    


Tuesday, 11 June – CJEU to rule on Deutsche Telekom’s claim for default interest over a cancelled fine  

On Tuesday, the Court of Justice of the EU (CJEU), the EU’s top court, will rule on a case (C-221/22 P) concerning Deutsche Telekom’s claim for default interest over a cancelled fine. 


Deutsche Telekom, along with other companies like Intel, British Airways, Singapore Airlines Cargo, and Cargolux, is seeking compensation from the EU for interest on annulled fines. Collectively, the claims amount to €780 million, with Deutsche Telekom specifically seeking €1.8 million in compensation. 


Most notably, Intel is claiming €593 million in compound interest on a €1 billion fine annulled in 2022. The General Court's annulment of the fine has led to Intel seeking substantial interest due to the long duration the fine was held by the Commission. Deutsche Telekom’s case in particular stems from a 2014 fine where Deutsche Telekom was penalised €31 million for anti-competitive practices in Slovakia. 


The interest claims on annulled EU fines, including the Deutsche Telekom case, stem from the CJEU decision in the Printeos case (T-201/17). In December 2019, the General Court ruled that the European Commission must pay default interest on refunded fines when the original fine is annulled. This precedent has led to all the aforementioned companies seeking compensation for interest on annulled fines, arguing the interest paid by the Commission was insufficient. 


In November, CJEU’s Advocate General Anthony Collins provided a non-binding opinion  rejecting Deutsche Telekom’s claims, arguing that the General Court made legal errors in its judgment. Collins highlighted that the Commission's liability for default interest should only cover the period between the 2018 judgment and the actual refund in February 2019, stating that the General Court incorrectly imposed an obligation to pay interest for a period before the 2018 judgment. The Advocate General’s ruling is not binding, but the Court tends to follow their recommendations. 


Overall, the outcome of this week’s judgement will most likely influence future claims and the EU's approach to interest on refunded fines. 



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