Week Ahead (16 September)

W/C Monday, 16 September – EU Trade Commissioner Dombrovskis to meet with Chinese Minister for Commerce to discuss EV tariffs 

This week, the Chinese Minister for Commerce Wang Wentao visits Brussels for talks with EU Trade Commissioner Valdis Dombrovskis. This is largely seen as a final attempt on behalf of China to convince the EU to change its approach to its recently imposed tariffs on Chinese electric vehicles (EVs).  

Last week, it was reported that the European Commission is poised to announce a second revision of the additional tariffs on Chinese EVs, marginally reducing them again since their introduction in July. SAIC, Volkswagen’s Chinese partner, will still face the highest duty, which has been slightly reduced from 36.3% to 35.3%. Other non-cooperative producers continue to face the same level of duties. Tesla’s tariff will drop from 9% to 7.8%, while Geely’s rate will decrease from 19.3% to 18.8%. BYD’s duty remains unchanged at 17%. These duties are imposed in addition to the standard 10% customs tariff that the EU applies to all foreign-made cars, regardless of engine type. 

On Thursday, the European Commission announced its decision to reject a set of compromise proposals, including setting a fixed minimum sales price and a volume cap on Chinese EV exports into the EU, that Beijing offered last month in an effort to avoid these duties. This came in the wake of the comments made on Wednesday by Spanish Prime Minister Pedro Sanchez who argued that the EU should ‘’reconsider’’ its plan to impose permanent tariffs of up to 36% on Chinese EVs, calling for a ‘’compromise’’ between the two sides in order to avoid a ‘’trade war.’’   

Beijing has now stepped up its efforts to lobby key Member States to oppose the adoption of duties. Sanchez’s public intervention, which also took place during his visit to Beijing, could be seen in this context. The final vote on whether to keep these provisional tariffs in place for five years is now scheduled for 25 September. Although Spain has joined Germany in its scepticism, it will be challenging to overturn the tariffs, as a qualified majority of 15 countries representing 65% of the EU population is required to reverse the decision.   

W/C Monday, 16 September – European Commission likely to announce decision on €1.3 KKR’s acquisition of pan-European live entertainment group 

This week, the European Commission is likely to announce its decision on whether to allow KKR’s acquisition of Superstruct Entertainment, a pan-European live entertainment company. 

In June, Providence Equity Partners agreed to sell Superstruct Entertainment, one of the largest festival promoters globally, to KKR for €1.3 billion. Founded in 2017, Superstruct owns more than a dozen major European music festivals and holds a portfolio of nearly 90 festivals across 10 countries. As part of the deal, Providence retains an option to invest €250 million in Superstruct, acknowledging the continued growth in demand for live entertainment as consumer spending shifts from goods to experiences. Announcing the deal, KKR's co-head of European private equity, Philipp Freise, highlighted the significant growth opportunities for Superstruct, drawing on KKR’s expertise in digital entertainment and ticketing through partnerships with companies like BMG and Trainline. 

The parties filed a notice of the proposed deal to the European Commission on 21 August. Although the Commission’s deadline for Phase 1 of the deal is on 25 September, a decision could take place as early as this week.   

Tuesday 17 September – Von der Leyen’s plan to present final list of nominees for the next Commission in jeopardy following Breton’s resignation  

Last Wednesday, President von der Leyen was scheduled to present the list of nominees to MEPs, along with their proposed portfolios, which include key areas such as competition, trade, and defence. However, the presentation was postponed by a week and was poised to take place in Strasbourg tomorrow. The original delay stemmed from Slovenia’s unresolved dispute over its Commissioner nominee. An ongoing deadlock between centrist Prime Minister Robert Golob and opposition conservative leader Janez Jansa has slowed the Slovenian Parliament’s approval process. 

Despite these setbacks, von der Leyen was still expected to present her plans for the next Commission tomorrow. However, earlier this morning, Internal Market Commissioner Thierry Breton announced his resignation from his post.  Breton, who was also President Macron’s official nominee for the next term and tipped for a vice-President seat with a strong economic portfolio, blamed his decision on President von der Leyen’s ‘’questionable governance’’. He claimed that von der Leyen had only a ‘’few days ago’’ asked France to withdraw his name for the next Commission ‘’for personal reasons’’ in return for an ‘’allegedly more influential portfolio’’.  Von der Leyen and Breton have found themselves at odds on several occasions over the last five years.   

As a result, the details of von der Leyen’s announcement tomorrow remain uncertain, as Breton’s resignation along with the unresolved situation in Slovenia could force her to reveal only the structure of the Commission without specifying individual portfolios. The presentation of the nominees' list to the European Parliament is a critical step for parliamentary committees to begin preparing for the confirmation hearings. While von der Leyen herself is exempt from these hearings, all other nominees must receive the approval of the European Parliament before they can assume office. However, the most challenging phase comes next: each commissioner-designate will undergo intense confirmation hearings before the European Parliament, often lasting several hours, where they will face rigorous questioning. Historically, it is not uncommon for some nominees to be rejected — during the last cycle, three failed to pass. These hearings, originally scheduled for late September, are now more likely to begin in early November. 

The goal is for the new European Commission to begin its term on 1 December. However, with hearings now pushed to November, any complications or additional hearings could further delay the process, potentially extending it into January 2025. 

Wednesday, 18 September – EU General Court rule on Google’s €1.49 billion antitrust fine over online ad contracts 

On Wednesday, the General Court, the EU’s lower court, is set to rule on Google’s appeal against the €1.49 billion antitrust fine imposed by the European Commission in 2019 over its AdSense advertising platform (Case T-334/19). 

The AdSense fine stems from Google’s practices between 2006 and 2016, during which it placed restrictive clauses in contracts with major websites using its ad platform. These clauses included exclusivity provisions that limited rival search ads from appearing and premium placement requirements that ensured Google’s ads had the most prominent positions on web pages. The Commission determined that these clauses were aimed at excluding competitors and gave Google an unfair advantage in the ad market. 

Google only removed these restrictive clauses after the Commission issued a formal statement of objections in 2016. Following its investigation, the Commission not only imposed the fine but also required Google to refrain from including any restrictions with a similar effect in future contracts and prohibited the reinstatement of the previously abusive clauses.  

The company subsequently filed an appeal with the General Court. Notably, this was the third fine imposed by the Commission on Google under the Commission’s competition chief Margrethe Vestager. Previous fines included a €2.42 billion fine in 2017 for violations related to Google Shopping and a €4.34 billion penalty in 2018 for anti-competitive practices tied to Android, both of which Google decided to appeal. Google has since made changes to its business practices regarding Google Shopping and Android in Europe to avoid further penalties but remains engaged in legal battles to challenge the fines levied against it. 

However, last week, Google lost the first of its legal challenges, after the Court of Justice of the EU (CJEU), the EU’s higher court rejected its bid to overturn its €2.42 billion EU fine for its shopping platform practices, imposed by the European Commission in 2017. Google’s appeal followed the EU's General Court decision in 2021 that upheld the Commission’s findings over the company’s abuse of its dominant market position. This week’s ruling by the General Court on its AdSense case could signal another EU blow for the US big tech firm, prompting another appeal with the CJEU.  

Thursday, 19 September – Bank of England committee to decide on interest rates; chances of a second consecutive rate cut appear slim  

The  Monetary Policy Committee (MPC) of the Bank of England (BoE) will meet on Thursday, with a pause in rate cuts widely priced in.  In its last meeting in August, the Bank cut its base rate from 5.25% to 5%, marking its first interest rate cut since March 2020, in a tight 5-4 vote. Despite the reduction, BoE Governor Andrew Bailey stressed the need for "careful" future cuts in borrowing costs. 

According to a late August poll by Reuters, out of 60 economists surveyed, 57 expected the BoE to hold its Bank Rate at 5%, with only three predicting a 25-basis point cut. However, markets expect further cuts later in the year, with one more likely in November when the BoE will release its next economic forecast. However, since then, newly released wage growth data has added a new dimension to the debate and slightly increased the chances of a rate cut, though it remains a less likely outcome. 

According to the Office for National Statistics (ONS), UK wage growth continued to slow in the three months to July. Average earnings, excluding bonuses, decelerated to 5.1%, down from previous levels. Annual pay growth, including bonuses, dropped to 4%, partially driven by the fact that a one-off NHS payment from June 2023 was not repeated this year. This slowdown in wage growth could ease inflationary pressures, offering more room for the BoE to consider further rate cuts. 

Yet, inflation still remains above the BoE's 2% inflation target, rising to 2.2% in July, up from 2% in June. The release of September’s inflation data, just a day before BoE’s MPC meeting, will be key to shaping expectations for upcoming rate decisions.