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Week Ahead (22 May)

Monday, 22 May – Irish DPC formally announces decision on Meta’s US-EU data transfer, hitting the US company with a record €1.2 billion fine

Today, Ireland’s Data Protection Commission (DPC) published its decision on the legality of Meta’s US-EU data transfers, imposing a record €1.2 billion fine on Facebook’s and Instagram’s parent company, for violating the EU's General Data Protection Regulation (GDPR). This figure exceeds the fine of €764 million imposed on Amazon in 2021, as the largest one under the GDPR.

In addition to the record fine, Meta has been given a deadline of 12 November to either delete or transfer back to the EU the personal data of European users that have been transferred and stored in the US since 2020. Furthermore, the DPC also ordered Meta to cease transferring EU user data to the US under the legal instrument of standard contractual clauses (SCCs), concluding that it ‘’did not address the risks for the fundamental rights and freedoms’’ of European citizens using Facebook. More specifically, the Irish regulator granted the company a transitional period of nearly 5 months in order to comply and stop relying on SCCs for these data transfers, with a deadline of 12 October.

In April, the European Data Protection Board (EDPB) issued its binding decision on the Meta data-transfer case, granting the Irish DPC, which is Meta’s main supervisor due to the company’s Dublin headquarters, a window of one month to issue its own decision. The dispute stems from a privacy complaint filed by Austrian campaigner Max Schrems in 2013. A new Transatlantic Data Privacy Framework (‘’Privacy Shield 2.0’’) is pending the European Commission’s ratification, following the U.S executive order, unveiled in October 2022. Currently, the Commission is preparing a draft adequacy decision assessing whether the new US Data Privacy Framework meets the EU standards, expected in the coming months.

If a transatlantic data deal is not finalised by DPC’s deadline of 12 October, Meta could temporarily operate in a legal vacuum. Notably last year, Meta threatened to terminate the operation of Facebook and Instagram in Europe in case the EU confirms the order. Nevertheless, the ban will most likely be followed by an appeal from Meta in both Irish and European courts, meaning that a Privacy Shield 2.0 might come into effect during the appeal process.

W/C Monday, 22 May – Greece braces itself for snap elections in the coming weeks, despite New Democracy’s landslide victory

Yesterday, Greece held parliamentary elections for the first time since July 2019. Despite an increase in cost-of-living, a wiretapping scandal, and a recent train crash prompting wide rallies, ND won nearly 41% of the vote, capitalising on a generally positive macro-economic outlook, the divided left-wing opposition, and Syriza’s vague economic agenda. The result marked a setback for Syriza’s leader Tsipras, who came to power in 2015 opposing austerity measures but later accepted creditors' demands.

Although ND’s lead was broadly expected, the 20-point margin between the ruling party and left-wing Syriza (20%) caught everyone by surprise. Yet, ND won 146 seats, 5 seats short of the required for a majority, due to a system of proportional representation, introduced by the previous government. Syriza’s socialist rival PASOK finished third with 11.5%, performing better than the latest polls projected. The Communist Party of Greece also increased its share of the vote, while the anti-establishment left-wing party of former finance minister Yanis Varoufakis, MeRA25, failed to enter the parliament.

Even though centre-left PASOK was originally projected to play the kingmaker’s role by joining forces either with Syriza or ND, the latter’s landslide victory makes a second snap election almost a certainty. Greek Prime Minister Mitsotakis already ruled out the possibility of forming a ruling coalition after this election, emphasising that his party’s landslide victory demonstrated Greeks’ desire for a majority government led by ND. His government voted to scrap the proportional representation system in 2020, meaning that in the likely case of second elections, a new electoral law will apply. A bonus of seats for the first party will be granted on a staggered basis, depending on the percentage of the first party, and could reach up to 50 seats.

Therefore, it is now expected that ND will opt for a snap election either on 25 June or 2 July in order to form a government with an increased rate of parliamentary seats, instead of joining forces with PASOK.

Tuesday, 23 May – Court of Justice hearing on Apple tax state aid case

On Tuesday, the Court of Justice of the European Union (CJEU) is set to hear the European Commission's appeal in the ongoing Apple-Ireland state aid case. This appeal follows the EU's General Court ruling in 2020 that overturned the Commission's finding that Apple had underpaid €13.1 billion in tax owed to Ireland between 2003 and 2014.

In 2016, DG COMP, the competition branch of the EU, concluded that Apple had concluded illegal deals with the Irish government to avoid taxation on profits from the sales of its technology products within the European Union. The amount owed in taxes over the last decade to the Irish state, DG COMP ruled in 2016, amounted to approximately €13 billion in tax, and €1 billion euros in interest. Both Apple and the Irish government appealed this decision and in July 2020, the General Court annulled the Commission's findings, stating that DG COMP had not demonstrated to the required legal standard that Apple enjoyed illegal state aid.

However, the Commission refused to accept the decision, deciding to file its own appeal. As the CJEU hears the appeal on Tuesday, the Commission has not provided detailed information regarding the grounds of its appeal. Apple continues to emphasise that there is no legal basis for the appeal to succeed while Ireland, which has a separate legal team to Apple, will also reiterate that the correct amount of tax was paid and no state aid was provided.

Wednesday, 24 May – Polish parliament to begin work on new legislation on judicial independence, aiming to unlock EU funds

On Wednesday, the Polish parliament is set to begin working on legislation that is crucial for unlocking €36 billion in grants and loans from the EU's pandemic recovery fund, almost a year after Poland’s national plan was endorsed by the European Commission when its government agreed on milestones for judicial changes. The funds are contingent on Poland finalising a law that addresses concerns raised by Brussels regarding judicial independence.

On 8 February, the Polish parliament passed the bill for judicial reform, a precondition for the release of the recovery funds. Nevertheless, on 10 February, Polish President Duda unexpectedly referred the bill to the Constitutional Tribunal for review and adjudication, after having openly expressed his doubts. However, there is a major obstacle in the way: a dispute within the Constitutional Tribunal, which has been unable to gather a quorum of 11 out of 15 judges due to internal conflicts. At least six judges claim that the term of the tribunal's president has expired and refuse to participate in hearings. Aiming to bypass the judges who are impeding progress, the ruling Law and Justice (PiS) party has proposed a bill that would lower the quorum required for the tribunal to make decisions from 11 to 9. However, both the opposition and PiS's coalition allies view this move with suspicion. Critics accuse PiS leader Jarosław Kaczynski of attempting to manipulate the court's rules for his own benefit, while PiS's coalition partner, Sovereign Poland led by Justice Minister Zbigniew Ziobro, is against any retreat in the ongoing dispute with Brussels.

Parliament will begin working on the legislation during a session scheduled for May 24-26, while the Tribunal’s President Przylebska will make another attempt to summon a quorum on 30 May. The government is poised for a breakthrough in unlocking the first tranche of recovery funds ahead of the country’s parliamentary elections next autumn. However, the European Commission is unlikely to decide until the legislation is passed. Hence, further delays to the completion of the judicial could result in a serious political blow for the ruling coalition.

Wednesday, 24 May – ONS to release UK inflation data for April

On Wednesday, the Office for National Statistics (ONS) will release the UK consumer price monthly inflation figures for April. The release follows this month’s announcement that UK GDP is estimated to have shrunk by 0.3% in March after showing no growth in February. Overall, in Q1 2023 the UK recorded growth of 0.1% compared to the previous quarter.

In March, annual inflation softened to 10.1%, down from 10.4% in February, when it witnessed an unexpected jump after three months of consecutive declines after reaching a 41-year high of 11.1% last October. Inflation remains more than five times higher than the BoE’s declared target rate of 2%. Furthermore, core inflation in March rose by 5.7% over the 12 months, remaining unchanged from its February rate, a point of particular concern for the BoE.

Earlier this month, the Monetary Policy Committee (MPC) of the BoE announced its twelfth consecutive rate hike, raising interest rates by 25 basis points to 4.5%, the highest rate since 2008. Appearing before the Treasury Committee last week, BoE’s Governor Andrew Bailey defended the central bank’s policies, stressing the supply-side nature of the shocks that have fueled inflation, to explain why inflation is still on double-digit figures despite its monetary tightening. Therefore, this week’s announcement will indicate whether inflation could return to single digits, as markets widely expect that BoE’s latest rate hike has marked the end of its tightening cycle.

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