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Week Ahead (20 May)



 

W/C Monday, 20 May – Newly agreed right-wing coalition in the Netherlands to defend its programme in the Parliament 

This week, the Dutch parliament will debate the terms of the new right-wing governmental coalition formed last week. The coalition includes the centre-right People’s Party for Freedom and Democracy (VVD), the right-wing populist Farmer-Citizen Movement (BBB), the centrist New Social Contract (NSC), and the far-right eurosceptic Freedom Party (PVV) led by Geert Wilders. 

 

Last November, Wilders won a dramatic victory in the Dutch general election. After 25 years in parliament, his party secured 37 seats, well ahead of the Green-Left coalition led by former European Commission Vice-President Frans Timmermans, which won 25 seats. The ruling liberal conservative VVD and the NSC followed with 24 and 20 seats, respectively. Following the announcement of the results, Wilders declared that “the PVV can no longer be ignored,” expressing his intention to govern. 

 

Thus, after six months of negotiations, Wilders managed to join the coalition by abandoning his bid to become prime minister in March and agreeing to moderate some of his more extreme policies, such as banning the Quran and mosques. Nevertheless, Wilders, a far-right ideologue who had previously advocated for the Netherlands' withdrawal from the EU, now sees his party in government for the first time in the country’s parliamentary history.  

 

One of the coalition’s most contentious plans is to implement what they term “the strictest asylum policy ever,” seeking an opt-out from the EU’s recently agreed migration pact. The coalition is also critical of EU enlargement, emphasising a merit-based accession process and reserving the right to restrict free movement within the EU if enlargement continues. Fiscal conservatism is another focus, with plans to reduce the Netherlands' contributions to the EU budget, opposing increased joint financing for defence and technology. On environmental issues, the coalition commits to existing climate agreements but plans to scrap measures to meet emissions targets and seek exemptions from EU nitrogen pollution regulations. Despite Wilders’ earlier stance, the coalition will continue the country’s support for Ukraine. 

 

The new government will consist of an extra-parliamentary cabinet, meaning ministers will be appointed from outside the current parliament. This is a departure from the typical practice where cabinet members are usually sitting parliamentarians. Notably, the four party leaders will not be part of the new cabinet. Although the new prime minister has not been decided yet, Ronald Plasterk, a former Labour Party minister who has shifted to the right, has emerged as a prominent candidate. 

 

W/C Monday, 20 May – KKR expected to file EU remedies on its €22.5 billion Telecom Italia deal while Vivendi legal challenge to be heard in Milan Court  

This week, KKR is expected to file a package of concessions to gain early EU approval for its €22.5 billion bid for Telecom Italia’s (TIM) landline network (Netco).  KKR’s offer, which also sees the Italian government retain strategic oversight over the network through a 20% stake, was approved by TIM’s board in November.  Since then, DG Comp has been in contact with TIM and KKR with preliminary questions before the deal was officially notified on 19 April.  

  

Last week, the European Commission’s competition directorate (DG Comp) met with Telecom Italia’s (TIM) competitors to discuss how the sale of its Netco to a consortium led by the private equity group would impact their respective businesses.  The EU antitrust enforcers have indicated to KKR and TIM that maintaining low wholesale prices for the Italian phone carrier’s rivals is crucial for approving the acquisition. 

  

By offering remedies KKR will aim to address EU concerns about potential price increases in the wholesale telecom market and could help avoid the extended scrutiny of a "Phase 2" in-depth investigation. More specifically, remedies are likely to include measures ensuring fair and reasonable access to the network, maintaining existing contracts established after the creation of FiberCop (TIM's last-mile grid unit), and allowing rivals direct access to the fiber infrastructure. Additional commitments may include addressing concerns over volume discounts granted to Telecom Italia, which would remain the primary customer of the new wholesale network operator. 

  

Since DG Comp announced changes to its review process of mergers in April 2023, seeking to simplify and expand the category of unproblematic mergers that can go through a “simplified” procedure, the number of deals being considered by DG Comp under this procedure has increased significantly. KKR’s acquisition of Netco does not qualify for this procedure however and will instead be considered under the “normal procedure”.  

  

DG Comp has until 30 May to decide whether to waive the deal or to open an in-depth investigation. However, should KKR offer remedies by 23 May, the current review deadline could be extended by 10 days to finalise a decision in June. If, despite the submission of remedies, DG Comp decides that a more thorough investigation is required, this should be completed by 90 working days from the decision deadline.  This should still enable the deal to be signed off by the 15 October deadline set by TIM.  The Italian government is likely to weigh in behind the scenes to try to ensure the deal will be approved as soon as possible.     

 

Also happening this week (21 May) is the Court hearing in Milan for Vivendi's legal challenge to the sale of Netco by TIM to KKR.  Vivendi is TIM's largest shareholder, with 24%, and had gathered four legal opinions to suggest that any sale of TIM would require the approval of an extraordinary shareholder assembly.  TIM, with three legal opinions in hand, stated that the sale of the network was a decision for an ordinary assembly which would ultimately leave the decision in the hands of the board.  Because Vivendi ultimately stopped short of asking the judge to put the deal on hold while the case was decided, there is a view that it keeps the case alive in Court to give itself more room for manoeuvre should it wish to divest itself of its TIM holding.    

 

Friday, 24 May – EU Competitiveness Council to discuss the future of the internal market 

On Friday, the EU Competitiveness Council, which brings together European ministers responsible for trade, economy, industry, research and innovation, will convene to discuss the future of the internal market amidst growing external competition. 

 

The discussion will centre on the key findings and recommendations of the report on the "Future of the Single Market," published last month by former Italian Prime Minister Enrico Letta. The report was highly critical of the current state of the EU’s single market, warning that without deeper integration across financial, energy, and telecommunications sectors within the next five years, the EU’s economic security will be at risk. Letta called for substantial changes in the EU's approach to market consolidation, including an overhaul of merger rules and significant investments in new technologies like edge computing, 6G, and AI. 

 

According to leaked draft conclusions for this week’s meeting, EU ministers acknowledge Letta’s alarming conclusions, noting that "deepening the Capital Markets Union (CMU) is key to attracting private investments, diversifying funding sources, and allocating capital efficiently across the Union." The draft also emphasises that "addressing strategic dependencies is vital for the EU to advance its green and digital transitions" in response to "unfair competition and protectionism" from third countries. This aligns with the Commission’s recent efforts to counteract China through anti-subsidy probes, including those on Battery Electric Vehicles (BEVs), wind turbines, and solar panels, and a probe into Chinese medical device procurement under the International Procurement Instrument (IPI). 

 

The original draft mentioned that relaxing the state aid framework should be limited, while the revised version warns against harmful subsidy races among member states. It now calls for consistent application and monitoring by the Commission, along with a simplified and accelerated notification procedure. This softening in wording on state aid is mainly driven by Germany and France, who accounted for 53% and 24% of the EU’s €672 billion state subsidies in 2022, respectively. Germany is also the only member state to have utilised the option to match foreign aid. 

 

Overall, the conclusions of Friday’s Council meeting will likely reflect the EU’s shift towards protectionism and increased state support for domestic industries. 

 

Friday, 24 May – European Commission due to publish its second evaluation report of the GDPR 

By 24 May, the Commission is due to publish its second evaluation report of the General Data Protection Rules (GDPR), the bloc’s landmark privacy rules brought in 2018. This report, mandated by Article 97 of the GDPR, requires consideration of developments in information technology and aims to ensure the regulation remains effective in the digital age. 

 

Despite being a focal point in global tech regulation by influencing data protection standards, it has also faced criticism over its current enforcement system, particularly in major cases involving big tech firms. Another point of criticism is the powerful role of the Irish Data Protection Commission, which has often found itself at odds with other national data protection authorities in Europe.  

 

Indeed, the first review of the GDPR in 2020 highlighted its success in setting a global standard for data protection and enhancing individuals' rights over their personal data. However, it also argued that enforcement had been hindered by resource constraints among national data protection authorities, leading to inconsistencies across member states. The review also noted the need for continuous adaptation to technological advancements to maintain the regulation's relevance. 

 

Since then, developments in the digital real have been accelerated with the emergence of advanced AI generative foundation models like OpenAI’s ChatGPT and Alphabet’s Gemini, posing a significant test for GDPR’s enforcement. OpenAI is facing scrutiny across Europe as various data protection authorities investigate allegations that ChatGPT violates GDPR standards. Indicatively, last month the Austrian privacy advocacy group Noyb filed a complaint with the Austrian data protection (DSB) authority against OpenAI, alleging that ChatGPT's generation of inaccurate personal data, such as incorrect birthdates, violates the GDPR.  

 

The Commission’s review, following a public consultation that expired in February, is expected to take stock of the above developments in its upcoming review.  

 

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