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Week Ahead (8 April)

W/C Monday, 8 April – European Commission expected to decide on the DMA gatekeeper status of Booking and X 

This week, the European Commission is expected to issue its decisions on the gatekeeper status of and X (formerly known as Twitter) under the Digital Markets Act.   


Last September, the European Commission confirmed its initial list of six tech companies qualifying as ‘’gatekeepers’’ under the DMA, namely Apple, Alphabet (Google), Amazon, Meta, ByteDance (TikTok), and Microsoft. Companies with an annual turnover exceeding €7.5 billion, a market capitalisation of over €75 billion, and active monthly users in the EU totalling 45 million fall under these rules. The European Commission has the power to investigate the actions of gatekeepers and fine them up to 10% of their global turnover from the preceding year if they are found to be in breach of the DMA. Since then, Apple, Google, and Meta announced a series of changes to ensure compliance with the DMA ahead of the 7 March deadline. 


Although ByteDance was included in the Commission’s initial list, it challenged its designation at the General Court, the EU’s lower court, claiming that TikTok’s inclusion to the list could undermine the ‘’DMA's own stated goal by protecting actual gatekeepers from newer competitors like TikTok’’ and applied for interim measures. However, in February the Court ruled against the suspension of TikTok’s designation, arguing that it could not prove that it needed it urgently to prevent “serious and irreparable damage”. ByteDance pledged last month to appeal the ruling. Meanwhile, on 25 March, the European Commission launched full-scale investigations into Apple, Google, and Meta’s compliance with the DMA, the first ones since the new rules entered into force. 


On 1 March, the online travel platform Booking filed a notification of its potential gatekeeper status under the DMA, alongside ByteDance and X, becoming the latest entry in the list of gatekeepers and the first European platform to be regulated by the new rules. The European Commission had a 45-day window to determine whether to classify the companies in question as gatekeepers, with a decision likely in the coming days. Should they be officially designated as gatekeepers, these entities will then have a six-month timeframe to adhere to the requirements of the DMA. 


W/C Monday, 8 April – European Commission likely to announce decision on Smurfit Kappa’s $11 billion acquisition of rival WestRock 

This week, the European Commission is likely to announce its decision on whether to allow Ireland’s Smurfit Kappa’s $11 billion acquisition of its American rival Westrock. Both Smurfit Kappa and Westrock are leading paper and packaging companies with a combined revenue of $34 billion. Their merger aims to form the largest global entity in the sector, dubbed Smurfit Westrock, valued at nearly $20 billion. The acquisition was announced in September 2023 and the involved parties filed a notice of the proposed deal to the European Commission on 11 March. 


According to the deal’s announcement, leadership continuity is assured with Smurfit Kappa CEO Tony Smurfit and chair Irial Finan retaining their positions in the merged company. Post-merger, Smurfit Kappa shareholders are anticipated to hold approximately 50.4% of Smurfit WestRock, with the deal expected to conclude in Q2 2024. 


However, the merger might receive increased scrutiny from the European Commission, particularly due to the folding carton manufacturing facilities of the two companies in Germany. The Commission’s assessment will likely focus on market reliance on local suppliers versus EEA-wide suppliers, which could stir competition concerns, leading to the launch of a four-month investigation. Although the Commission’s deadline for Phase 1 of the deal is on 18 April, a decision may come this week. 


Tuesday, 9 April – Simon Harris to be elected Taoiseach 

This evening, Leo Varadkar will officially resign as Taoiseach and tomorrow Dail Eireann (Irish Parliament) is expected to elect Simon Harris as his successor.  With 80 government TDs in a 160 seat Dail, Harris needs the support of Independent TDs and looks to have secured the support of at least 6 at the time of writing.  

At 37 years old, Harris is set to become Ireland’s youngest ever Taoiseach.  His entire adult life has been spent in politics, having dropped out of third level education to become a parliamentary assistant to Frances Fitzgerald, who would go on to become Justice Minister and more recently an MEP.  He was first elected as a local councillor in 2009 before winning a seat in the Dail the 2011 general election.  

While Harris is known for being hard working and energetic, the initial signs are that he is unlikely to improve Fine Gael’s electoral fortunes – indeed, a 6 April opinion poll showed support for Fine Gael fell by 1% to 21%.  While he has made various commitments, such as delivering 250,000 new homes between 2025 and 2030 (32,695 new homes were delivered in 2023, ahead of the 29,000 target), it remains the case that one-third of Fine Gael’s sitting TDs are confirmed as not seeking election, with Leo Varadkar and Simon Coveney likely to follow.  The electoral challenge is therefore significant.  

Harris will need all the time available to him if he is to reverse his party’s fortunes and at the back of his mind will know that he is unlikely to be reappointed Taoiseach following the next general election.  Therefore, his election as Taoiseach at this stage makes it much more likely that this coalition will serve its full term, or close to it.      


Wednesday, 10 April – Thursday, 11 April – CJEU hearings on airline appeals against air cargo cartel decision 

This week, the European Court of Justice (CJEU), the EU’s highest court, is set to hear a series of legal challenges lodged by Airline companies operating in Europe against a General Court decision regarding their alleged participation in an air cargo cartel two decades ago. 


In March 2022, the General Court, the EU’s second highest court, dismissed a series of appeals lodged by Air Canada, Lufthansa, Singapore Airlines and LATAM Airlines among others, against the fines that were initially levied in 2010 and then reissued in 2017 by the European Commission after rectifying procedural errors identified by the court. The European Commission concluded that the involved airlines had formed a cartel, by fixing prices for air freight services, fuel, and security surcharges between December 1999 and February 2006. Notably, Lufthansa and its subsidiary Swiss International Airlines were exempt from the fines after they reported the cartel's existence to the EU competition authority, demonstrating cooperative behaviour. Subsequently, the companies referred the case to the CJEU.  


The hearings of Air Canada (367/22) and LATAM Airlines (C-375/22) will take place on Wednesday, whereas Singapore Airlines (C-379/22) and Lufthansa (C-380/22) will follow suit on Thursday. 


Thursday, 11 April – ECB to hold monetary policy meeting, expected to keep rates unchanged for a fifth consecutive time 

On Thursday, the ECB Governing Council (GC) meets to decide the next steps for Eurozone interest rates with another pause in rates priced in, expected to be the last one before monetary loosening begins in June. In March, the ECB decided to keep its rates unchanged for a fourth consecutive time, at a record high of 4%, despite a worsening economic outlook. The minutes of its March meeting, released last Thursday, revealed that the GC is showing growing confidence in inflation returning to its target.  Furthermore, on Wednesday, Eurostat’s flash estimate for the euro area indicated that inflation in March dropped from 2.6% to 2.4%, continuing its overall downward trend at a faster than originally projected rate and moving closer to the ECB’s 2% target. 


Before Wednesday's inflation announcement, ECB policymaker Robert Holzmann showed openness to a June interest rate cut, contingent on additional supportive data. Holzmann, known for his hawkish stance within the ECB's Governing Council, highlighted the need for caution, particularly in maintaining alignment with the Federal Reserve's policies to ensure the effectiveness of any rate adjustments. On the dovish side of the debate, France’s Francois Villeroy de Galhau and his Italian counterpart, Piero Cipollone, have recently indicated a preference for an April rate cut, warning about growth risks. 


Nevertheless, the ECB maintains a cautious stance. One significant concern is the persistent increase in services prices, which constitute a substantial portion of the eurozone inflation basket.  Additionally, a premature rate cut by the ECB, in the absence of a corresponding move by the Fed, could lead to significant fluctuations in foreign exchange and bond markets. Although the GC acknowledged in March that the ‘’case for considering rate cuts was strengthening’’, it also added that ‘’it was wise to await incoming data and evidence’’ before making any decisions.  


While the ECB might further reinforce expectations for a June rate cut in its next meeting, it will most likely remain cautious about committing to further reductions, given the potential for inflation surprises. ECB’s President Christine Lagarde also stated in March that she will not commit to a path of pre-set interest rate cuts.  Furthermore, she highlighted Q1 negotiated wages as a key piece of data to influence ECB decision making – this become available on 23 May.  Thus all 77 surveyed economists surveyed by Reuters expect the ECB to maintain the deposit rate at 4.00% on 11 April, with 90% of respondents foreseeing the first cut occurring in June.  


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