Week Ahead (4 December)

Tuesday, 5 December – Court of Justice ruling on Luxembourg’s case of state aid to ENGIE

On Tuesday, the Court of Justice of the EU (CJEU) is expected to announce its ruling on two cases (Engie Group v Commission, C-454/21 P) and (Luxembourg v Commission, C-451/21 P).

In June 2018, the European Commission found that Luxembourg had granted unlawful state aid to ENGIE through tax rulings related to two financing structures. The tax rulings allowed the deductibility of accrued charges connected with a convertible loan, leading to a "deduction without inclusion" outcome. The Commission argued that this arrangement provided ENGIE with a selective advantage. In May 2021, the General Court of the EU upheld the Commission's decision, stating that Luxembourg had granted unlawful state aid. Consequently, ENGIE and Luxembourg submitted separate appeals to the CJEU.

However, in May 2023, the CJEU’s Advocate General Juliane recommended that ENGIE should not pay the €120 million in back taxes ordered by EU competition authorities. Instead, she argued that national law alone constitutes the reference framework and ‘’only manifestly incorrect tax rulings under that national law may constitute a selective advantage’’. The Advocate General’s ruling is not binding but the Court tends to follow their recommendations. Hence, this week’s ruling will most likely reflect the recommendation’s key points.

Wednesday, 6 December - Deadline for Amazon to provide information about measures taken to ensure compliance with the DSA

By Wednesday, Amazon will have to provide the European Commission with information regarding its efforts to ensure compliance with the Digital Services Act (DSA), which officially entered into effect on 25 August. On 15 November, the US online retailer received a formal request for information from the European Commission, as part of the bloc’s DSA oversight. More specifically, the Commission is seeking details on Amazon's compliance with DSA obligations related to risk assessments and mitigation measures to protect consumers online, particularly regarding the dissemination of illegal products, the protection of fundamental rights, and its recommender systems.

Sending a formal request for information is a preliminary step before the potential initiation of a formal investigation. Last month, Alibaba, X (formerly known as Twitter), Meta, YouTube, TikTok, and Snap received similar requests. Amazon has been given until Wednesday, to provide the requested information, with the possibility of facing an investigation and fines of up to 6% of its global revenue if it fails to do so. This move is part of the European Commission's efforts to ensure online marketplaces take responsibility for removing illegal and unsafe products from their platforms. Amazon’s Store is considered a "very large online platform" (VLOP) under the new EU law, which subjects it to more stringent obligations in combating such content.

Thursday, 7 December – Trilogue negotiations on the ‘’right to repair’’ rules to kick off, following breakthrough agreements

On Thursday, interinstitutional negotiations on the EU's ''right to repair’’ initiative are set to kick off. Last month, both the Council of the EU and the European Parliament adopted their own respective stances on the ‘’Right to Repair’’ initiative, seeking to facilitate and reduce the cost of repairing devices for consumers in the European market. Last March, the European Commission published a proposal for common rules promoting the repair of goods which would grant consumers the right to request from producers the repair of products that under EU law are subject to “reparability requirements.” Its key aim is to push companies to repair instead of replace their products, part of the EU's broader efforts to push for a circular economy and reduce electronic waste.

The Parliament's position introduces an additional one-year guarantee period for repaired goods, the option for a replacement product if the repair takes too long, and market authorities' intervention to lower spare parts prices. The Parliament also seeks to end the closed system practice of phone makers, ensuring that smartphones continue to work after independent repairs. Additionally, financial incentives for citizens to choose repair are proposed. The Council’s agreed position partly diverges from the Commission's original proposal, as EU countries reject prioritising repair over replacement within a product's two-year legal guarantee period, considering it an "unacceptable limitation of consumers' options." Instead, member states assert that consumers should retain the choice between repairing or replacing defective products. The Council also proposes a six-month guarantee period after a repair and advocates limiting legislation to products already subject to the EU's ecodesign requirements, differing from the European Parliament's broader product coverage and push for a one-year guarantee after repair.

The trilogues will aim for a deal to be reached in February, well ahead of the EU elections in June. However, given the parliament’s more ambitious version of the proposal and the Council’s own diverging points, we should be prepared for the possibility of a lengthier process.

Thursday, 7 December – Friday, 8 December – EU – China summit to be held amid trade tensions

This week, an EU-China summit will be held in Beijing, amid growing trade tensions. In her speech at the European China Conference on 16 November, President von der Leyen highlighted the goal of achieving a level playing field in trade with China, emphasising that Beijing’s trade surplus with the EU was the highest in history in 2022, just below €400 billion. She has also highlighted the issue of Chinese overcapacity in the clean tech sector, echoing a growing sense that the Chinese competition is unfair, particularly in industries like electric vehicles (EVs) and the wind sector.

In the EU, there is a growing sense that Chinese competition is unfair, particularly in industries like electric vehicles (EVs) and the wind sector. Indicatively, in her State of the Union speech in September, von der Leyen announced an EU anti-subsidy probe into Chinese electrical manufacturing, claiming that “huge subsidies” are distorting free and fair competition. The Commerce Ministry of China responded negatively leading to speculation that Beijing could retaliate, exposing European car companies, specifically German car brands who have a significant presence in China. To that end, the EU is expected to call for ‘’balanced and reciprocal economic relations’’ with China, according to a note sent to EU ambassadors last week. Spanish Prime Minister Pedro Sanchez, German Chancellor Olaf Scholz, and French President Emmanuel Macron, all to Beijing earlier this year to hold talks with Chinese leaders, indicating willingness to maintain high-level bilateral engagement.

However, the need to ‘’de-risk’’ from China’s dependency was reaffirmed by both President von der Leyen and President Biden in their bilateral meeting on 20 October, indicating growing convergence on a stance combining diplomatic engagement with economic diversification.

Friday 8 December - EU finance ministers set to vote on the next EIB President with Spain’s Nadia Calvino the likely candidate; a deal on new EU fiscal rules likely but far from certain

On Friday, the EU Finance Ministers Council will vote on the next President of the European Investment Bank (EIB).

For weeks, the competition remained essentially a two-horse race, between Spain’s Deputy Prime Minister and Finance Minister Nadia Calvino and the Vice-President of the European Commission and Competition Commissioner, Margrethe Vestager. However, Calvino has now emerged as the likely candidate to lead the EIB. Last week, Belgium’s finance minister, Vincent Van Peteghem, who is leading the selection process as chair of the EIB’s rotating presidency in its board of governors, informed his EU counterparts of its intent to propose Calvino’s endorsement. He also granted them a deadline of 2 pm today to state whether they also endorse Calvino to speed up the process ahead of Friday’s ministerial meeting.

Last month, German Chancellor Olaf Scholz publicly expressed his support for Calvino, further bolstering her position, while France had not publicly backed a candidate. Nevertheless, France and Germany will want to agree on a candidate before it is put to vote in order to avoid the optics of the two biggest shareholders supporting different candidates. Hence, the latest development renders Calvino’s endorsement the likeliest scenario. Vestager, who has been on unpaid leave since the announcement of her candidacy, will return to her role as the EU’s Competition Commissioner.

Finance ministers will also aim to reach a deal on the bloc’s new fiscal rules. In April, the Commission proposed reforms to EU spending rules marking a shift away from the current one-size-fits-all approach to debt reduction. The move towards a more tailored approach, based on each country's specific debt sustainability analysis, represents an attempt to provide more flexibility and accuracy in addressing individual countries' fiscal challenges, especially the ones with high debt-to-GDP ratios such as Greece, Italy, and Portugal. Yet, there has been an ongoing debate since then over numerical benchmarks.

The EU's Stability and Growth Pact, which was suspended during the pandemic, is set to come back into force on 1 January. The current rules cap budget deficits at 3% of GDP and limit public debt to 60% of GDP. EU governments are working on a new system to replace the pact, considering country-specific issues. German Chancellor Olaf Scholz stated that a resolution on the new EU fiscal rules is much closer, even though there is no consensus yet on the extent of flexibility for member states and whether exceptions will be made. Last week, the EU's budget chief, Johannes Hahn, suggested that a deal on the review of the EU's economic governance is within reach, and he called for stricter enforcement against countries violating the new rules.