What to expect from the European Commission this year? Takeaways of the SOTEU 2022

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On Wednesday, Ursula Von der Leyen delivered the annual State of the Union Adress in the European Parliament. In her hour-long speech, she outlined an elaborate range of projects and initiatives that will be the focus of the European Commission for the coming year. The speech was gripped by the influence of the Russian invasion in Ukraine, highlighted even more by the Commissioners’ clothes – all dressed in yellow and blue.

Strong Words

Most apparent of this year’s State of the Union were the strong and definitive statements of the President of the European Commission. Some analysts described the speech as a ‘real war time speech’, symbolized by the presence of Ukrainian first lady Olena Zelenska whose name was addressed several times in the European Parliament. Not only did Von der Leyen explicitly show solidarity with Ukraine and other neighboring countries, she also directly referenced the closing of the research center of the VU Amsterdam in the context of the atrocities against the Uyghur population in China.

Energy

Von der Leyen did not mince her words about Putin having started the EU energy crisis, even before the invasion in Ukraine with Gazprom, the Russian state-owned gas supplier, reducing gas supply to the EU. She was proud about the EU already succeeding in reducing its dependency on Russian gas and will continue to do so. As expected, she called for not just temporary solutions to the energy crisis but a permanent paradigm shift.

Short-term

In the short-term the EU will focus on keeping energy affordable for the many households and businesses that rely on it. In this context, Von der Leyen introduced a price cap on the revenue of companies that generate electricity with low costs and asked fossil fuel business for a solidarity contribution, which would be distributed across society. Also, households and businesses have been addressed to reduce electricity consumption by 10% during peak hours. The implementation timeline of these measures remains unclear and is hard determine considering the different structures of the electricity market in EU countries.

Long-term

In the long-term the EU will focus on renewable energy production as stipulated in the Green Deal. In this light, Von der Leyen introduced a Task Force to investigate how we can have reasonably lower prices for gas. Referring to the Commission’s REPowerEU proposal that aims to produce both 10 million tons of domestic renewable hydrogen production and 10 million tons of H2 imports by 2030, Von der Leyen raised specific attention to hydrogen and introduced the European Hydrogen Bank. This Bank will use money from the Innovation Fund to contribute 3 billion euros to construct a hydrogen economy. A sign that the European Commission is committed to develop an EU hydrogen market, possibly alongside investments done via the IPCEI instrument.

Securing critical resources

With the current energy crisis, comes investment. Von der Leyen highlighted the importance of Next Generation EU called for investments both in sustainability and to invest sustainably and. Also, the question of access to raw materials was elaborately discussed. The President went as far as to say that access to raw materials such as lithium and rare earths would become more important than oil and gas. Therefore, the EU would need to avoid becoming independent to one country which the EU currently aims to realize by the Global Gateway plan. Also, Von der Leyen announced the upcoming Critical Raw Materials Act, that would hopefully follow the “success of the Chips Act”, of which the legislative process is still ongoing.

Health

While health policy is generally not one of the competences of the EU under the Treaties, this year’s SOTEU made references to the EU’s efforts in the field, a sign of the Commission’s ambitions to become more important here. Von der Leyen praised the initiative of two production facilities for vaccines in Africa and discussed similar initiatives in Latin America. Beyond the references to Covid-19, she specifically addressed the mental health challenges a large portion of the EU population is facing. She introduced a new initiative on Mental Health, which will focus on the accessibility, affordability, and appropriateness of support.

Von der Leyen closed the speech with a long-awaited call for a new European Convention, which was met with a loud applause.

Which companies will be switched off from gas? And how is that determined?

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That there is a gas crisis is clear to everyone. However, the picture becomes more diffuse when the crisis reaches its peak. How should the Netherlands deal with gas shortages and can vital infrastructure be saved? Rob Jetten – the minister for Energy and Climate Policy – will come up with an advice on these matters and has already started consultations with stakeholders. The exact outcome of this advice is not yet known.

The action framework to address a gas crisis is determined by the Gas Protection and Recovery Plan – based on an EU regulation – and includes eleven measures. At some point, if an emergency phase has been declared, non-protected customers may be forced to switch off from gas supplies in order to save protected customers. Protected customers are households and organisations with a social function such as hospitals, and non-protected customers are, for instance,the chemicals and metals industry.

If the current Gas Protection and Recovery Plan is followed, non-protected customers can be switched off based on consumption volume: the largest customer switched off first, then the second, and so on. This takes no account of social and economic consequences because, as the plan itself states, criteria to make a ranking would be subjective. Whether this will continue to be the case is under discussion.

At EU level, it was decided this summer to update the national gas crisis plans. Consideration was given to the possible disruption of society and the economy if certain industries were to be switched-off from gas. This is explicitly an advice – knowing that there are no easy solutions – which means that the Netherlands does not have to follow this consideration.

The minister for Energy and Climate Jetten is currently working on the further operationalisation of the Gas Protection and Recovery Plan. Part of this is determining who exactly are protected and non-protected customers, and in what order non-protected customers will be switched off, if necessary. This could lead to much discussion among stakeholders. After all, switching off will be a disaster. Not only for the company in question, but it also impacts other parts of the supply chain. Several companies have recently stopped production due to extreme energy costs. This casts a shadow ahead.

Minister Jetten has stated that he prefers to focus on voluntary gas savings. One important way of doing this is to develop a gas tender – one of the eleven measures. In this tender, companies can indicate in advance the price at which they wish to renounce consumption of a specified quantity of gas for a specified period. The details are still being discussed. The review of the entire plan is expected to be completed by 1 October. It will then be debated in the House, which may offer room for refining.

The Netherlands is currently still in the first phase of the gas crisis, the early warning phase. The gas reserves are at the desired level and gas consumption is reducing. Nevertheless, a sense of urgency is in order. History shows that the course of crises is difficult to predict. In addition, any ranking of industries may be a blueprint for other crises. It is therefore very important for the companies in question to anticipate these developments. This means that they need to be well informed about the latest developments. It can then be decided how they can provide input into the decision-making process – to ensure that their voice is heard.

How do we manage the large flow of policy documents?

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Since 1 July 2021, the cabinet has made the underlying departmental decision notes public. This was prompted by the report ‘Unprecedented Injustice’ by the parliamentary committee inquiry into childcare benefit, which stated that the provision of information to parliament must be more adequate, open and complete. It is part of a trend where more and more policy documents are made public. This flow of data must ensure transparency in policy choices. For anyone who follows ‘The Hague’ for work, however, this is becoming an ever greater challenge.

It seems that not only are ministerial letters being written, external investigations being carried out and underlying policy documents being released more and more frequently – the volume is also increasing. Digitalisation has played a huge part in this over the past ten years. This also means that the now twenty political parties in the House of Representatives have quite a bit of work to do to analyse this and to monitor the government. The same applies to the media – which also have a monitoring function – and interest groups. Sometimes, a decision made in The Hague turns out to be impossible for a municipality, organisation or company. Due to the large stream of letters, memorandums, parliamentary questions and reports, it happens more and more often that documents are not read or read too late.

Robots do the work?

To keep track of this flow of documents and to have a filter on it, we increasingly leave the work to artificial intelligence, including some algorithms. They are the first filter and make the flow of data manageable for those who know what to look for.

Thanks to the efforts of the Open State Foundation, more attention is being paid to access to policy documents. Municipalities still use a patchwork of systems, but even there more and more documents are public. The House of Representatives itself has also ensured that all documents are easily accessible and that debates can be followed and watched online. This transparency and open data also lead in this case to even more documents and even more data. Using algorithms, we can make this somewhat manageable, but therein lies a risk.

Context

The risk of political monitoring with artificial intelligence is the lack of context. Not only the context of the policy memorandum or the parliamentary letter, but also of the user himself. The user’s own situation is also subject to topicality, as a result of which news that was previously not interesting (and which was therefore not clicked on) suddenly becomes very important.

All tools that help make large data streams manageable can be a good addition for anyone following the political arena. In ‘Brussels’ everyone knows POLITICO. But be aware of the limitations of automated tools. There is always a blind spot, just like with humans. That’s why Public Matters has chosen a combination in which digital tools (such as InfoMatters) help to filter information, but a consultant always pays attention to the ‘Brussels’ or ‘The Hague’ context and the client’s current affairs. This way, we not only share the information, but also advise directly when action is needed.

Would you like to know more about the monitoring of ‘The Hague’ & ‘Brussels’ developments and our unique system InfoMatters, with which you are always up to date with political-administrative developments? Please contact us or visit this page for more information.

Reform of international tax system not a done deal

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Led by the Organisation for Economic Co-operation and Development (OECD), 136 countries that together represent about 90 percent of the total global economy reached an agreement on reforming the international tax system (the “OECD agreement”) in October 2021 after years of negotiations. Among other things, the countries – including the Netherlands – agreed that large multinationals will pay at least 15 percent profit tax, regardless of the country in which they are based. Although politicians indicated that they wanted to implement this agreement quickly, progress is currently faltering staggering on all sides.

This blog outlines what has happened since October 2021. Furthermore, it examines the most recent policy developments and their implications. Can we expect any changes soon, or will the ambitious OECD agreement fizzle out?

 

An important milestone

The OECD is a socio-economic partnership of almost 40 countries, including the Netherlands. Together with the G20, the OECD has established the so-called OECD/G20 “Inclusive Framework on BEPS” (“Inclusive Framework”). This consists of more than 135 countries and jurisdictions to encourage cooperation on “Base Erosion and Profit Shifting” (“BEPS”). Among other things, this focuses on tax avoidance, international tax rules and transparency.

Until recently, one issue remained unaddressed: a solution to the challenges that the ever-increasing digitalization of the global economy poses to the taxation of multinational companies. Think of digital companies doing business from a distance. While the reform was originally aimed specifically at companies operating in the digital economy, the final agreement is generically designed and relevant to all companies of significant size. The agreement is based on two separate pillars, with the ambition of implementing both pillars in 2023, each with its own objective:

  • Pillar 1 regulates a different distribution of profits and tax rights between countries for multinationals. The aim is for countries where these multinationals have customers or users to be able to levy taxes. Even if the multinational has no physical presence in the countries concerned (such as digital companies). Proposals for the implementation of this pillar are still awaited, postponing the implementation date to at least 2024, as the OECD is still in the process of drafting model rules.
  • Pillar 2 introduces a global minimum tax rate of 15 percent for multinational companies with annual sales of 750 million euros or more. On December 20, 2021, the OECD published model rules for implementation of this pillar and is therefore the part that has been discussed in recent months with regard to implementation.

Cabinet Rutte IV wants to get rid of the image of the Netherlands being a tax haven

The Netherlands is positive about the tax reforms. According to Marnix van Rij, State Secretary for Finance and responsible for Fiscal Affairs and the Tax Administration, the Netherlands is currently making efforts within the Inclusive Framework to develop and implement Pillar 1. In addition, the current cabinet wants to take away the image of the Netherlands as a tax haven and take a leading role within the EU in tackling tax avoidance. The cabinet is committed to the successful introduction of the minimum tax rate. However, several political parties, including the CDA (Christian Democrats), VVD (Liberal Conservatives) and GroenLinks (Greens), expressed their concerns about the financial consequences and the effects on the regulatory burden for businesses and the Tax Authorities, among others. The CDA questioned for example the complexity of the proposal and the feasibility of the timeline. Nevertheless, a majority in the House of Representatives supports the importance of the proposal, also in view of its cross-border nature.

 

European quarrels: still no agreement on Pillar 2

On December 22, 2021, the European Commission published the draft Directive for the introduction of the minimum tax, the second pillar. France, which took over the Presidency of the Council of the European Union from Slovenia on January 1, 2022, included this as one of its policy priorities. However, an agreement on tax legislation is subject to the principle of unanimity. This principle means that unanimity is required in the area of tax legislation, but also for decisions on foreign policy and EU membership. Therefore, in this case, the unanimous agreement of all 27 EU Member States is required.

After Budapest, Tallinn and Stockholm agreed to the EU proposal after some adjustments, including a change in the implementation date of Pillar 2 to 31 December 2023, only Warsaw still opposed. The reason for this refusal was not so much the plans regarding Pillar 2, but rather that Brussels had refused to approve the Polish COVID-19 recovery plan. When concessions were made in early June, the Polish Minister of Finance, Magdalena Rzeczkowska, also withdrew her veto.

Just when an agreement was on the table, a few minutes later Hungary unexpectedly and to the great displeasure of the other Member States, used its veto, where previously no objections had been raised. Budapest has been at odds with Brussels for years over a rule of law dispute. The Dutch Finance Minister, Sigrid Kaag, called Hungary’s action “remarkable.” Prime Minister Rutte also complained about the sudden resistance. To put it diplomatically: patience with Hungary is running out.

Whatever Hungary’s intentions may be, for the time being, it will probably not succeed in luring the EU into a successful compromise as Poland did. ‘Brussels’ saw advantages in a rapprochement with Poland, given the country’s economic and security issues as a result of the war in Ukraine. That compromise led to outrage in the Commission itself – two vice presidents voted against it – and to critical questions from the European Parliament and Member States. This makes it unlikely that the Commission will compromise with Hungary – a country that is even more deficient in the rule of law and regularly obstructive when it comes to European policymaking.

Reform is still a long way off

Partly due to the blockades by Poland and Hungary, the discussion on the principle of unanimity and the right of veto on tax legislation within the EU has flared up again. The European Commission wants to change decision-making to qualified majority voting for non-controversial legislation regarding tax policies, such as administrative cooperation and the fight against tax fraud and avoidance. However: to change this, consensus is also needed. For instance, the Netherlands is currently not in favour of abolishing the unanimity rule for fiscal policy.

Meanwhile, on the other side of the ocean, an agreement on taxes, climate, and health care (the so-called “Inflation Reduction Act”) was being negotiated in the US Senate. The blockade of Hungary was greeted with applause by the Republicans. Eventually, the “Manchin-Schumer Deal” was reached, including compromise legislation on the minimum profits tax. One problem: the proposed minimum tax incorporated into the Manchin-Schumer deal is not consistent with the OECD agreement. With all the implications for an uneven playing field. This creates the risk of other countries withdrawing from the OECD agreements. It has also led to concerns that multinationals will face a web of complex and inconsistent tax regulations.

All in all, it seems that real reform is still far ahead of us. The success of the new legislation will largely depend on how the plans are worked out: the tax devil is in the details. Pillar 2 appears to be a tough process, while Pillar 1 has yet to follow. Either way, the reform will require intensive multilateral cooperation and great commitment from multinational corporations. The political struggles, the technical details and the consequences for the regulatory burden make this an extremely complex project.

Public Matters advises companies and other organizations that are indirectly / directly affected by the impact of the reform of the (international) tax system and other tax legislation. Please check this page for more information or contact us.

EU Presidency of the Czech Republic: ‘Crisis President’

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On 1 July, 2022, the Czech Republic took over the Presidency of the Council of the European Union from France. Every six months the Presidency of the Council changes and is it the turn of a different Member State. The Czech Republic will work under the slogan “Europe as a task: rethink, rebuild, repower”. In this blog Fieke Creijghton and Valérie Mendes de León look ahead to the EU Presidency of the Czech Republic for the next six months, and with which priorities the Czech Republic will take on this task.

Starting position

In the midst of several crises – the Ukrainian crisis, the climate crisis, the Corona crisis, the energy crisis and rising inflation – POLITICO crowned the Czech Republic as ‘crisis president’. The central European country is expected to focus on mediating these crises. In addition to external challenges, the Czech Republic will also have to prove itself at home. For example, a recent poll by a Czech research firm showed that only 36 percent of its residents is satisfied with the European Union. Among other things, this has caused the Czech Republic to be Eurosceptic in the past. A combination of rising domestic trust and its geographical location between Hungary and Poland makes for an interesting starting position during this presidency.

In addition, the current Czech government consists of a coalition between several European coalitions. With the coalition of conservative liberals (“Together”) and center-left liberal coalition, the Czech coalition parties are represented in no less than three different European political groups of the “Greens,” the “EPP,” and the “ECR”. The internal differences within the Czech coalition couldcause tensions.

Priorities

Central in the Czech Presidency, led by Prime Minister Petr Fiala, is the Russian war in Ukraine. Both the Czech Republic and the EU have indicated that peace in Ukraine is imperative in the coming months. Specifically, the presidency has stipulated five priorities:

  • Rebuilding Ukraine and coordinating the refugee crisis caused by the Russian invasion;
  • Energy security;
  • Strengthening European defense capabilities and cyber security;
  • Strategic resilience the European economy;
  • Resilience of democratic institutions.

Regarding the tensions in Warsaw and Budapest, the new Presidency wants to ensure that all Member States are included in a constructive dialogue.

Energy Transition

One of the Presidency’s priorities concerns ensuring energy supply and energy transition. The Czech Republic wants to build on the European energy infrastructure and strengthen the resilience of the European energy supply. The Czech Republic aims to do this by increasing the role of nuclear energy. In parallel with implementing this vision, Prague has the difficult role of maintaining short-term energy supplies for the winter of 2023, without becoming dependent on long-term fossil fuel contracts. In order to achieve this, the EU has recently adopted the ‘Gas Storage’ proposal, the REPowerEU plan and the plan to jointly purchase gas. It is expected that the Czech Republic will put pressure on progress in these policy areas.

Tech

Within the digital policy domain, two priorities includeincreasing cyber security and making Europe’s economy resilient. The Czech Minister for Digital Affairs, Ivan Rakušan, indicated in an interview with Euractiv that he wants to continue where France ended. Thus, the Czech Republic will take on the implementation of the Digital Markets and Services Acts. Also, the Czech Republic wants to prioritize the AI Act and the creation of the framework for a European Digital Identity. Parallel to the third priority, the goal of reducing technological dependence on countries outside the EU has also been set to counter cyber threats.

In an interview with the Czech magazine Leaders, Czech European Affairs Minister Mikulàš Bek said that in these times of crisis, the priority above all is the daily management of the European Union. The Presidency of Europe as a Task will be mainly about that: accomplishing day-to-day tasks to lead the Union through the crises.

The Czech Republic will hold the Presidency until the end of 2022; in 2023 it will first be Sweden’s turn and then Spain. Do you want to look ahead to the Presidency of these Member States? Or are you curious about how your organization can act upon the Presidents’ priorities? Please do not hesitate to contact us!

Nitrogen crisis puts provinces on lobbyists’ map

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The Netherlands has a remarkable number of provinces for a country of its size. Just compare it to Canada. The second largest country in the world has 10 – plus 3 so-called territories. Someone arriving in the Netherlands for the first time might think that the Dutch attach great value to this layer of government. This should be the case in view of the nitrogen issue – and other environmental matters such as permits – but it is not evident from the ballot boxes, for example. Turnout in provincial elections has fluctuated between 45 and 55% since the early 1990s. One reason is that voters don’t have a picture of what the county does. Advocates do or will soon have that in mind.

In the coming period, until after the provincial council elections in March of next year, the province must develop far-reaching policies to reduce the emission of nitrogen drastically on the instructions of Minister Van der Wal-Zeggelink (Nature & Nitrogen). This has consequences for livestock farming, which emits the most ammonia, as well as the industrial, mobility and construction sectors. The latter are underexposed in the media frenzy, but that does not mean that they remain out of range.

The Minister of Nature and Nitrogen is working on a national plan to reduce the other nitrogen source, nitrogen oxides, for which the mobility, industrial and construction sectors are held primarily responsible. Nitrogen oxides blow out further than ammonia, that one ‘nitrogen leg’, and that makes national measures more logical. The provinces can, albeit to a lesser extent, still turn the knobs in the implementation. They will try, because the social tensions are enormous. The ominous comments that nature would not be sufficiently helped even without livestock farming do the rest.

By the way, industry can also be called to task with regard to ammonia emissions. In the National Programme for Rural Areas, Nitrogen Minister Van der Wal-Zeggelink has set the provinces clear targets for reducing ammonia emissions. Because the majority of these emissions come from agricultural sources, the minister feels that the reduction must come primarily from this sector – but not alone. Industry with a permit sometimes emits ammonia near nature reserves and can also have reduction targets imposed on it.

Not everything is set in stone yet. The provinces must provide customization and the ammonia targets can still be adjusted somewhat, for example as a result of measures to reduce nitrogen oxides. The switch from fossil fuels to renewable energy can help with the latter but will take time. Especially when you consider that Limburg and North Brabant, both with a hefty nitrogen task, have announced a temporary halt on new or heavier electricity connections because there is insufficient capacity.

If someone lands in the Netherlands next year after the election, their perception could just be right. The province suddenly matters and it is buzzing with political activity. Advocates will want to make their mark on nitrogen policy.

Photo by Petr Ganaj

The patient’s voice in the healthcare debate in the Netherlands

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The last few weeks in the Dutch House of Representatives were dominated by healthcare. Various (new) measures with far-reaching consequences for the industry and the patient were announced. The House also met to debate medical prevention, the Dutch medical and aids policy and package management.

But attention seemed to wane: (trade) media hardly reported on it, the public gallery of the Troelstrazaal remained virtually empty and the drug debate ended an hour and a half earlier than planned. With the announced changes to the Drug Reimbursement System (GVS) and the negotiation scheme for expensive medicines (Sluis), one would expect the House and the field to be at full speed. In practice, members of the House debated specific issues, while other measures with major consequences were left undiscussed. The stakes are high for the industry, so it is crucial for them to be heard in the debate. Yet the patient’s voice (still) seems to determine the political agenda.

Who is being heard…
Members of parliament are leaving their ears to concrete appeals from those who are directly affected by a measure. In the run-up to the debate, several patient associations spoke out against the recent decision by Minister Kuipers (Health) to remove vitamin D from the basic health insurance package. With success: during the drug debate, several parties adopted this line of communication and engaged in a debate between supporters and opponents.

A similar voice from ‘the patient’ was heard in relation to the pilot project for making the HIV inhibitor PrEP available. The appeal for this also came from a vulnerable group in society. Two days prior to the debate on drug policy, a petition from Soa-Aids Nederland and others called for this drug to be made widely available. A large group of people waiting cannot use the drug in the current pilot. Under pressure from the House of Representatives, the government has decided to include as many people as possible from the vulnerable group in the current budget.

… and who is not?
The technically more complicated topics, such as the proposed modernization of the GVS, were mainly addressed in a written question round prior to the debate. This modernization should yield an annual savings of €140 million. And although some organizations indicated that patients will suffer as a result, this topic was discussed less than vitamin D or PrEP.

It does not help that not all the concrete consequences of the GVS modernization have been mapped out yet. Which drugs are involved exactly? And who is “the patient”? As a result, the debate now focuses on the doctor and the industry, which may make it less attractive for the House and the cabinet to engage in debate on these issues. Especially if the (media) attention stays away and the stands remain empty.

Find the patient’s voice
The last word has not yet been said on drug policy and the various policy intentions will continue to be fleshed out in the coming period. The House of Representatives will continue to look for connection with the patient. During the summer recess, parties in the field and industry could take stock of the concrete consequences of the proposed policy and where the effects will be felt the most. Tightening up communication and involving the patient could help to redress the slackening of attention in ‘The Hague’. Either way, the field will have to get creative in how they get their issues back on the Hague agenda.

Public Matters is the public affairs and lobbying consultancy specializing in policy advocacy and strategic communications.

EU reaches agreement on Digital Markets Act (DMA)

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Last night, Thursday 24 March, the European Parliament, the Council of the European Union and the European Commission reached an provisional agreement on the EU Digital Markets Act (DMA). After a record legislative journey of only 15 months, this effectively ends the trilogue negotiations – some technical details are still being worked out at official level.

We have previously written about the substantive debates in Brussels here and here. What are the results of the negotiations, how to proceed with enforcement, and what is the timeline from now on?

 

Big Tech curbed

The DMA shifts the focus of combating abuse of market power in the digital economy from an ex-post approach via antitrust cases at EU or Member State level, to ex-ante regulation, including a list of do’s and don’ts for so-called gatekeepers in the tech sector. Gatekeepers are companies with a market capitalisation of at least €75 billion or annual turnover of €7.5 billion, and at least 45 million monthly users.

The DMA will have a significant impact on the market power of the big tech companies, as soon as the legislation has been adopted. Users will be allowed to remove pre-installed apps, gatekeepers will no longer be allowed to favour or ‘rank’ their own services when searching for them and app stores will have to allow alternative payment options for consumers. In addition, messaging services such as Telegram, Whatsapp and iMessage should be able to interoperate and communicate with each other.

Companies that fail to comply with the obligations can be fined up to 10 percent of the worldwide annual revenues. In case of repeated violations, this can increase to 20 percent and the Commission can even prevent the company from acquisition efforts.

 

Effective enforcement

Throughout the negotiation process, the need for effective enforcement became an increasingly common refrain in Brussels. A solid legal text is one thing, but if companies and organisations cannot be held to the letter and spirit of that text, it’s toothless. During trilogue negotiations, therefore, extra attention was paid to the provisions that addressed enforcement.

In the end, it was decided that the European Commission will have the central role in enforcement. The Directorate-General for Competition (DG COMP) is already investigating how it can (re)structure its internal organisation to carry out this task. It is also likely that new Commission employees will have to be hired specifically for the enforcement of the DMA. MEP Schwab, rapporteur for the EP, even suggested that the Commission should hire people from national competition authorities.

In the Netherlands, the Personal Data Authority, the Consumer and Market Authority, the Media Authority and the Financial Markets Authority took a shot across the bow by establishing the Digital Regulation Cooperation Platform (SDT). This cooperation must, among other things, facilitate the enforcement of the DMA, but also of the DSA and the Data Act.

Time will tell to what extent the relevant national and EU authorities will be able to properly enforce the DMA.

 

Timeline

Now that the political negotiations are over, a formal process of enactment, translation and legalisation will commence. The DMA is expected to enter into force in October, but the main new obligations (Art. 5 and 6) will only become effective in 2023, allowing companies to take preparatory measures. The timeline (as expected):

April/May Confirmation of provisional agreement by Council and IMCO (internal market) committee in European Parliament
September Plenary vote by the European Parliament
September/October Publication of the DMA in the EU Official Journal
October Entry into force of the DMA, 20 days after publication
April 2023 Provisions of the DMA become effectively applicable, 6 months after entry into force

Public Matters advises companies and other organisations that are active in the tech sector, or which are impacted by the DMA, DSA and other tech related legislation. See this page for more information.

Saying goodbye to gas – is the war in Ukraine accelerating Europe’s energy transition?

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The war in Ukraine is above all a humanitarian disaster that many in Europe no longer thought possible. In addition to major geopolitical consequences, there are also severe economic consequences. In the Netherlands, you only have to drive to the petrol station or look at your energy bill and it quickly becomes painfully clear how much Europe has become (too) dependent on Russia in essential markets. The great dependence on gas from Russia is now resulting in rocketing energy prices and a market that is operating at the limits of its capacity. Uncertainty and instability dominate the international market and, as a result, the discussion about energy dependence and the energy transition is rapidly intensifying at every possible level.

Russian gas as elephant in the room

There has been longstanding discussion within the EU about the large gas imports from Russia, and the dependence that the West has created as a result. Yet dependence on Russian gas has only increased in recent years. In the Netherlands, around 15 to 20% of the gas supply comes from Russia, and across Europe as much as 45% by 2021. The problem with this was always obvious – yet Russian gas often proved to be the painful elephant in the room.

The consistent choice of Russian gas is in line with the longstanding, deliberate policy of promoting economic interdependence between the EU and Russia. Wandel durch Handel, was the idea in Europe: if we trade intensively, mutual dependence grows and peace in Europe is guaranteed. However, this peace has proven to be a utopia; moreover, in an extensive analysis, the Volkskrant describes that Russia was happy to watch Europe tie a hand on its back with the growing interdependence. On the other hand, economic dependence has also made Russia more vulnerable; with the massive import of gas from Russia, the West is a major financier of the Russian treasury. Russia is the third-largest oil producer in the world: energy – overwhelmingly in the form of oil and gas – accounts for 60% of exports and 40% of Moscow’s treasury.

Severe sanctions

The invasion of Ukraine marks a historic turning point in international relations. The West realizes that a new era has begun, and that trade and cooperation with Russia is no longer justifiable, reliable, or desirable at this time. This is resulting in massive sanctions that Russia has not seen before. As such, it became clear last week that Western countries are working on the toughest possible sanction against Russia: stopping the import of oil and gas. The US led the way with an immediate ban on Russian oil, gas and coal. The UK will also stop importing gas and oil this year.

For the EU, this is still a step too far; it simply depends too heavily on Russian gas. Yet here too, a shift is taking place. Last week the European Commission presented a plan to reduce the dependence on Russian gas by two-thirds by the end of this year. According to the plan, called REPowerEU, the EU can do without Russian gas before 2030 by diversifying gas supplies and accelerating the promotion of renewable energy. In the Netherlands, too, the government has been called upon by means of a widely supported motion in Parliament to come up with a plan that would allow the Netherlands to become independent of Russian gas as soon as possible.

Highest gear

It is evident that the current crisis has the potential to accelerate the European energy transition. In the short term, there is a need to look for reliable gas suppliers and to build up and obligate gas reserves. The future, however, is sustainable; in the EU’s hyperambitious REPowerEU plan Frans Timmermans leaves no room for doubt: “let’s dash into renewable energy at lightning speed”. The aim of the brand new plan is to switch to sustainable energy sources like wind, sun, hydrogen and biogas (especially bio-ethane) in the highest gear. In addition, massive efforts must be made to save energy and the import of hydrogen must provide a major contribution. The European Commission is thus stepping up the pace of the earlier Green Deal plans and the Fit-for-55 objectives. In this way Europe’s energy supply must become autonomous, resilient and above all sustainable in record time.

The disconnection of Russian gas is also currently a hot topic in the Netherlands. The House of Representatives has called on the government by means of a motion to draw up a plan to reduce energy dependence on Russia as quickly as possible. In addition, the topic has been discussed in plenary debates, a roundtable and a special Commission debate is scheduled soon. However, the urgency is perhaps best reflected in the strong support from the Groningers for further opening the gas tap in the province in order to be less dependent on Russian gas. For years, gas production in Groningen has been one of the most sensitive issues in the country; the reaction of the Groningers therefore clearly reflects the sentiment in the Netherlands – we are also done with Russian gas here.

Energy transition – cheaper than ever?

In the space of two weeks, the energy market has changed fundamentally. Olof van der Gaag, chairman of the Dutch Sustainable Energy Association (NVDE), remarked during a roundtable discussion last week in the Dutch House of Representatives on Russian gas that a situation that was unthinkable until recently has now occurred: fossil energy has become unprecedentedly expensive and renewable energy is suddenly the cheaper and more reliable alternative.

As a result, the market dynamics are changing significantly. The current situation leads to strong sustainable incentives: for consumers it has become almost a necessity to make energy saving a high priority and to make the switch to cheaper green electricity, and for producers this in turn leads to strong incentives to produce green electricity. The conclusion, according to van der Gaag, is that the energy transition could well be ‘cheaper’ than we had ever imagined. Simply because renewable energy and energy savings are cheaper than continuing along the current route, which many previously thought would be the other way around.

Looking ahead in the Netherlands

On March 22, the committee for Economic Affairs and Climate (EZK) will meet for a special committee debate on the security of our gas supply. The short-term measures that will be discussed include stricter regulations for gas storage facilities, extra supplies of LNG and extra gas production in the Netherlands. In addition, in May the government will present a plan to accelerate energy transition in the longer term and how this can be financed. If the ambitious targets are to be achieved and the pace of change accelerated, all hends will have to be on deck.

The government has a key role to play in accelerating the energy transition. During the aforementioned roundtable, almost all of the invited parties stressed that the government should take the lead: regulate and facilitate, was the request. So one thing is certain – the government should optimally enable the market to facilitate the energy transition as quickly and effectively as possible.

Photo by Magda Ehlers via Pexels

Looking back: a dialogue on lobbying in the Slovenian Parliament

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Last Friday Pieter Walraven (Managing Partner) attended a session called ‘Professionalization of legal lobbying’ at the Parliament of Slovenia. Together with, amongst others, Mihael Cigler (Slovenia), Markus Eder (Austria), Dominik Meier (Germany) and Dominique Reber (Switzerland), he discussed the experiences with lobbying regulation in other countries, including the Netherlands.

“We discussed the importance of defining lobby/lobbyist. Especially in countries where a register has been introduced, ambiguities and wrong expectations arise if the definition is not properly determined and discussed. In Germany, a broad definition was chosen, but some parties were excluded. These include churches and trade unions, even though these organisations also promote their interests.

Dominique Reber emphasised the importance of giving all interested parties room to make their voices heard. In Switzerland, referendums play an important role in this. In the Netherlands, when legislation and regulations are drawn up, we see more attention for consultations and for making transparent the parties that have been consulted.

I myself reflected on the importance of a counterbalance. There has been a lot of talk about this in the Netherlands over the past year, and rightly so. The session in Slovenia reminded me that there is still a lot of work to be done. In the Netherlands, for instance, 17.4 million inhabitants are represented by only 150 MPs (1 in 116,000) divided over 20 political groups. Compared to many other EU countries, this is absurdly low. Given the amount and complexity of the challenges, I regularly wonder how policymakers can adequately supervise the national administration with these limited resources. The central government has also been scaled down in relative terms in recent years, with the result that much sector-specific knowledge has disappeared from ministries. This also makes the dialogue with that sector more difficult.

So I fully support the focus on strengthening countervailing power. But it takes time to realise this. For lobbyists, the lack of knowledge is by nature an opportunity. However, it is much more than that. It is an extra responsibility for everyone who represents interests. It means they have to deal responsibly with the difference in knowledge, be transparent about interests and be prepared to tell the whole story.

This brings me to a point that I consider crucial in public affairs: mutual understanding. A good advocate must be able to empathise with the person on the other side of the table. That means insight and understanding of that person’s context, agenda and perspectives for action. And taking these into account instead of just looking after one’s own interests. In the geopolitical arena, too, we are regularly confronted with the importance of mutual understanding. Those who invest in mutual understanding lay the foundations for a dialogue.

A structural dialogue on lobbying is currently lacking in the Netherlands. In the past year, however, lobbying has been discussed more in the House of Representatives, partly due to incidents. For this reason, would it not be a good idea to organise an annual round-table discussion and debate on lobbying? That would do much to raise awareness among both policymakers and the public. It would also ensure that lobbying rules and (voluntary) codes of conduct become more alive and receive broader support. I hope that people will get a better understanding of how lobbying takes place in the Netherlands. Maybe some prejudices will be confirmed, but people will see that the majority of lobbyists contribute to the public debate in a healthy way.”