Week Ahead (3 April)

W/C Monday, 3 April – Coalition talks to begin in Finland, following electoral victory of the conservative National Coalition Party

On Sunday, Finland held its first parliamentary elections since April 2019. The centre-right National Coalition Party (KOK), led by Petteri Orpo, managed to secure a narrow victory with 20.8% of the vote (48 seats), followed by the populist right-wing Finns Party (46 seats), which won a record 20.1%. Despite increasing its number of seats, the Social Democratic Party of Finland (SDP) led by Sanna Marin, prime minister since 2019, finished third with 19.9% of the national vote (43 seats). For weeks the three parties were competing neck to neck with no clear winner emerging in the polls.

The Marin-led 5-party coalition had to deal with both Covid-19 and the impact of Russia’s invasion of Ukraine. However, its measures of economic support drove governmental debt up to 70.9% in Q3 2022, which has turned out to be a key campaign issue. Meanwhile, the Centre Party, the Greens, and the Left Alliance, three of the parties participating in the outgoing governmental coalition, recorded significant electoral losses. The Centre Party secured 23 seats, the Greens followed with 13, while the Left Alliance won 11, losing 8, 7, and 5 of seats respectively.

Under Finland’s system of proportional representation, Orpo, who has vowed to continue his country’s strong support for Ukraine, will have to form a coalition with more than 100 seats in the 200-seat parliament. This could turn out to be a tricky process as he will have to choose between forming a right-wing coalition with the Finns Party or reaching an agreement with Marin’s Social Democrats and its smaller allies. Outgoing prime minister Marin has so far been reluctant to open up about a possible collaboration, although the Social Democrats, the Greens, and the Left Alliance have already ruled out any alliance with the Finns. However, the Finnish political system is known for its pragmatism and flexibility, with inter-party cooperation across ideological divides being normal. Therefore, the process of forming a coalition is not expected to be as lengthy as in other EU member states.

Meanwhile last Thursday, the Turkish parliament unanimously ratified Finland’s accession to NATO, bringing Helsinki one step closer to the alliance.

W/C Monday, 3 April - Von der Leyen to visit Beijing, alongside Macron

This week, the President of the European Commission, von der Leyen, visit Beijing alongside French President Macron, for talks with President Xi Jinping.

This will be her first visit to China as the Commission’s President and will take days only a few days after her full speech on the EU’s relations with China. Last week, von der Leyen warned that ‘’the way China continues to interact with Putin’s war will be a determining factor for EU-China relations going forward’’ and highlighted Beijing’s stance on Taiwan, human rights violations in Xinjiang, and economic retaliations against Lithuania as evidence of a more ‘’repressive’’ policy at home and more ‘’assertive’’ approach abroad.

The Commission’s President also stressed the need to reduce economic reliance on China, urging member states to step up screening of foreign subsidies and other policy tools against economic coercion. Finally, she implied for the first time that the EU could terminate negotiations for a trade deal with China, known as the Comprehensive Agreement on Investment, which has been suspended since 2021.

The lessons learned from its energy overreliance on Russia have increased scepticism in the EU over its economic ties with China, impacting the bloc’s approach when it comes to its reliance on Beijing for technological goods and critical raw materials. Yet, both Macron and von der Leyen are also expected to push for a more pragmatic approach toward China, based on economic de-risking rather than a complete decoupling of bilateral economic ties.

Monday, 3 April – European Commission to announce its preliminary assessment of Orange- Másmóvil merger deal

Today, the European Commission will announce its preliminary assessments of the proposed €18.6 billion merger between Orange Group and MásMóvil, Spain’s second and fourth largest telecom operators respectively.

In July 2022, the two companies signed a binding agreement to combine their operations in Spain. Thus, the case could be an interesting test of the Commission’s appetite for greater market consolidation in the telecoms sector, after rejecting a $12.6 billion purchase of Telefonica’s O2 by CK Hutchison in 2016.

Per the latest reports, the EU antitrust regulator is expected to initiate a more in-depth investigation (Phase 2) following the end of its preliminary review on 3 April. This means that MásMóvil would most likely have to offer remedies to secure the Commission’s final approval. The Commission has already confirmed that it will reject the request of the National Commission for Markets and Competition (CNMC), the Spanish antitrust watchdog, to take charge of the case.

Wednesday, 5 April – Deadline for Meta to implement changes to its ad policy in the EU

Last Thursday, Meta announced it will introduce significant changes to its ad policies in the EU by 5 April. Meta was forced to find a new approach following a landmark decision of the Irish Data Protection Commissioner (DPC) in January, concluding that the company was in breach of GDPR rules and lacked legal grounds to process the data of their European users, resulting in a €390 million fine. The DPC, alone among EU regulators, had initially accepted Meta’s “performance of a contract” legal justification for processing user data. The DPC draft Decision was then sent to the other European Data Protection Authorities – 10 of whom raised objections to this decision by the DPC. As no consensus was reached on these objections, the European Data Protection Board (EDPB) was called upon to settle the dispute between the Supervisory Authorities within two months. Article 65 of the GDPR empowers the EDPB to do so and the EDBP sided against the Irish DPC and therefore Meta. As a result, the DPC was forced to issue the above mentioned landmark decision in January 2023.

As part of this decision, Meta was granted a deadline of three months to find a new legal basis to take corrective measures and ensure its compliance with the GDPR, replacing its data-targeting advertising model. To that end, Meta’s planned changes will introduce a ‘’legitimate interest’’ legal basis for advertising, which is one of the six justifications allowed under GDPR for processing personal data.

Putting a behavioural advertising model on a legitimate interest footing is highly problematic.  In particular, for legitimate interest to be valid, it requires three cumulative conditions to be met, namely; purpose, necessity and balance.  Regarding “necessity”, EDPB guidelines suggest that an assessment must "ensure that the processing of data based on legitimate interests does not involve an unduly broad interpretation of the need to process data... this means that it is necessary to assess whether there are other, less invasive means of achieving the same objective".

The “balance” condition is also a significant obstacle – it effectively requires the data controller to assess whether the processing of data prevails over the rights and freedoms of the data subject.  This has also been affirmed at the Court of Justice of the European Union which, in its 2019 Fashion ID GmbH & Co. KG ruling, in which Facebook was a named party, found that data processing under legitimate interests was permissible “except where such interests are overridden by the interests or fundamental rights and freedoms of the data subject”. 

It is also worth noting that in 2022, TikTok sought to change the basis for data processing from consent to legitimate interest. It was firstly warned by the Italian regulator this would breach not only GDPR but also the EU e-Privacy directive.  Shortly thereafter, following engagement with the Irish DPC, its lead regulator under GDPR, TikTok agreed not to implement the change pending further analysis by the DPC. The Belgian regulator has also ruled against an attempt by the Interactive Advertising Bureau Europe to use legitimate interest as a legal means to process user data. Legal challenges to this latest maneuver by Meta are inevitable and likely to succeed. In the same blog post, Meta indicated it would allow European users to opt out of personalised ads on its platforms such as Instagram and Facebook in favour of other broader categories such as age and geographic location. It also indicated it would appeal the January DPC decision preventing it from using “performance of a contract” to process user data.