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08 June 2021
Clev­er moves
Re­lo­cat­ing tal­ent safely, smartly, and seam­lessly As an in­ter­na­tion­al busi­ness, you need your best people to be mo­bile. That can re­quire as­sign­ing ex­ec­ut­ives and em­ploy­ees to dif­fer­ent ter­rit­or­ies – of­ten at short no­tice.CMS Ex­pat Desk – part of the largest em­ploy­ment and tax teams in Europe – provides com­plete and co-or­din­ated ad­vice and sup­port on tax, pen­sions, so­cial se­cur­ity, pay and em­ploy­ment law for ex­pat­ri­ate em­ploy­ees. Glob­al sup­port – from one point Our ex­pat­ri­ate spe­cial­ists are net­worked across 43 coun­tries in Europe, Asia, Africa and Lat­in Amer­ica to give you multi-jur­is­dic­tion­al sup­port – all ser­viced from a single point of con­tact.From the start to ter­min­a­tion of an as­sign­ment, we can help en­sure the op­tim­al leg­al, tax and re­mu­ner­a­tion ar­range­ments for both for the em­ploy­ee and for your busi­ness.With our sup­port, you are free to de­ploy your people wherever they need to be – swiftly and seam­lessly.Our team can:Draw up em­ploy­ee con­tracts cov­er­ing all leg­al as­pects of an as­sign­ment in any giv­en jur­is­dic­tion­Keep you up to speed on the tax and so­cial se­cur­ity re­gimes in each ter­rit­ory – and help re­lo­cated staff nav­ig­ate any po­ten­tial pit­falls in the sys­tem.Ad­vise on op­tim­ising the be­ne­fits of an em­ploy­ee’s ex­pat­ri­ate status – e.g. in terms of tax, re­mu­ner­a­tion and pen­sion ar­range­ment­sHelp your busi­ness man­age multi-jur­is­dic­tion­al payroll and tax ob­lig­a­tion­sAd­vise on spon­sor­ing pen­sion schemes in mul­tiple coun­tries, in­ter­na­tion­al trans­fer of be­ne­fits and en­abling em­ploy­ees to con­tin­ue scheme par­ti­cip­a­tion.Watch the videos for in­form­a­tion about re­gimes in dif­fer­ent coun­tries. For more de­tails about of­fers in in­di­vidu­al jur­is­dic­tions and leg­al as­sist­ance feel free to reach out to your usu­al CMS con­tact or send an email to em­ploy­[email protected]­al.com.
12 May 2021
Sus­tain­ab­il­ity and gre­en­wash­ing – the Dutch view
Con­sumers in­creas­ingly con­sider sus­tain­ab­il­ity when mak­ing pur­chases. As a res­ult, more and more com­pan­ies are us­ing sus­tain­ab­il­ity claims on the pack­aging of their products and in ad­vert­ise­ments. This prac­tice, how­ever, cre­ates the risk of "gre­en­wash­ing": the dis­sem­in­a­tion of dis­in­form­a­tion to present an en­vir­on­ment­ally re­spons­ible pub­lic im­age by us­ing mis­lead­ing word­ing or vague claims. Ac­cord­ing to the Dutch Au­thor­ity for Con­sumer & Mar­kets ("ACM"), gre­en­wash­ing can re­duce con­sumer trust and lead to un­fair com­pet­i­tion. To ad­dress this, the ACM has re­cently pub­lished guidelines on sus­tain­ab­il­ity claims. Con­sumers and or­gan­isa­tions also seem to be alert to the is­sue of gre­en­wash­ing. Sev­er­al com­plaints about sus­tain­ab­il­ity claims have been sub­mit­ted to the Ad­vert­ising Code Com­mit­tee ("ACC") in the re­cent years. This art­icle dis­cusses the guidelines on sus­tain­ab­il­ity claims of the ACM and the AC­C's ap­proach to sus­tain­ab­il­ity claims. ACM Guidelines on Sus­tain­ab­il­ity Claims Sus­tain­ab­il­ity is one of ACM's key pri­or­it­ies in 2021. The ACM, which not only su­per­vises com­pet­i­tion law but also un­fair com­mer­cial prac­tices in the Neth­er­lands, pub­lished the fi­nal ver­sion of their Guidelines on Sus­tain­ab­il­ity Claims on 28 Janu­ary 2021. Two days earli­er it had already pub­lished its fi­nal draft Guidelines on Sus­tain­ab­il­ity Agree­ments on the ap­plic­a­tion of com­pet­i­tion law to sus­tain­ab­il­ity agree­ments between un­der­tak­ings.The Guidelines on Sus­tain­ab­il­ity Claims con­tain five rules of thumb that are ex­plained us­ing vari­ous ex­amples. First, com­pan­ies should make clear the sus­tain­ab­il­ity be­ne­fits that a giv­en product of­fers. Second, the sus­tain­ab­il­ity claims used must be sub­stan­ti­ated with facts and kept up-to-date. Third, com­par­is­ons with oth­er products, ser­vices or com­pan­ies must be fair. Fourth, com­pan­ies must be hon­est and spe­cif­ic about their sus­tain­ab­il­ity ef­forts. Lastly, visu­al claims and la­bels should be help­ful to con­sumers and not con­fus­ing.Upon its pub­lic­a­tion, the ACM com­mu­nic­ated that its Guidelines on Sus­tain­ab­il­ity Claims would serve as basis for en­force­ment by its con­sumer pro­tec­tion de­part­ment. Three months later, on 3 May 2021, the ACM com­mu­nic­ated that it had in­deed launched in­vest­ig­a­tions in three sec­tors in which it pre­vi­ously had found many po­ten­tially mis­lead­ing claims: en­ergy, di­ary and clothes. Over 170 com­pan­ies act­ive in these sec­tors re­ceived let­ters from the ACM in which they were asked to check the ac­cur­acy of their sus­tain­ab­il­ity claims. In the let­ters, the ACM an­nounced that as from 14 June 2021 it would as­sess the ef­fects of its ac­tion and start fin­ing com­pan­ies that still com­mu­nic­ate claims they can­not ful­fil.The ACM can sanc­tion a vi­ol­a­tion by im­pos­ing an ad­min­is­trat­ive fine of up to EUR 900,000 or 1% of the gross turnover. Dutch Ad­vert­ising Code The Neth­er­lands also has a self-reg­u­lat­ing sys­tem re­gard­ing ad­vert­ising, which in­cludes la­belling. The ACC is the body deal­ing with this sys­tem and the rules on ad­vert­ising are con­tained in the Dutch Ad­vert­ising Code (“DAC”). Any­one who be­lieves that an ad­vert­ise­ment vi­ol­ates the DAC can sub­mit a com­plaint to the ACC. In case of a DAC vi­ol­a­tion, the ACC will up­hold the com­plaint and re­com­mend that the ad­vert­isers in­volved dis­con­tin­ue this ad­vert­ising. The ACC can­not grant dam­ages or im­pose any fines. However, over 95% of all ACC re­com­mend­a­tions are re­spec­ted due to the AC­C's policy of "nam­ing and sham­ing" – pub­lish­ing the names of ad­vert­isers un­will­ing to com­ply and co­oper­ate on the ACC web­site. Spe­cial Ad­vert­ising Code for En­vir­on­ment­al Ad­vert­ising Sus­tain­ab­il­ity claims can be seen as en­vir­on­ment­al claims. This means that the Spe­cial Ad­vert­ising Code for En­vir­on­ment­al Ad­vert­ising ("CEA") is ap­plic­able. The CEA ap­plies to the en­tire life cycle of all goods and ser­vices – from pro­duc­tion to waste pro­cessing. Based on Art­icle 3 CEA, en­vir­on­ment­al claims must be demon­strably cor­rect and since en­vir­on­ment­al claims are of­ten for­mu­lated in ab­so­lute terms, stricter re­quire­ments are im­posed on the evid­ence the ad­vert­iser must provide. Ad­vert­ising Code Com­mit­tee The im­port­ance of fact-based proof in sus­tain­ab­il­ity claims was high­lighted in sev­er­al ACC judg­ments. For ex­ample, the ACC ruled that the claim "100% com­postable" on Bioodi cof­fee cups was mis­lead­ing be­cause Bioodi could only demon­strate through test res­ults that the cof­fee cups were 90% com­postable (ACC 9 March 2020, 2020/00059). Ac­cord­ing to the ACC, the as­sump­tion that a 90% de­grad­a­tion dur­ing the test peri­od ul­ti­mately means that the cof­fee cups are 100% com­postable is in­con­sist­ent with the re­quire­ment of Art­icle 3 CEA that an en­vir­on­ment­al claim must be demon­strably cor­rect.Fur­ther­more, the ACC con­sidered the claim "This plastic bag is en­vir­on­ment­ally friendly" mis­lead­ing since en­vir­on­ment­ally harm­ful fossil en­ergy was needed for both the man­u­fac­ture and re­cyc­ling of the bag (ACC 24 Ju­ly 2014, 2014/00325).The claim “our pack­aging is 100% re­cyc­lable” on plastic bottles of Coca-Cola was not con­sidered to be in vi­ol­a­tion of Art­icle 3 CEA of the ACC be­cause Coca-Cola had suf­fi­ciently sub­stan­ti­ated that its bottles are made of fully re­cyc­lable ma­ter­i­als. It did so by cit­ing the guidelines of the European PET Bottle Plat­form and demon­strat­ing that its bottles are made from trans­par­ent PET, which is con­sidered a re­cyc­lable ma­ter­i­al based on these guidelines (ACC 20 Decem­ber 2017, ACC 2017/00812). The ACC noted that the claim "100% re­cyc­lable" does not mean that the ma­ter­i­als ac­tu­ally have to be 100% re­cycled.Green­peace, the party that filed the claim, also charged that the com­pany was in vi­ol­a­tion of Art­icle 10 CEA since the re­cyc­ling of half-litre bottles in­to new Coca-Cola bottles did not take place in prac­tice. Art­icle 10 CEA states that en­vir­on­ment­al claims re­lated to the re­cyc­ling of products or parts of products are per­miss­ible only if a suf­fi­cient pro­por­tion of the re­com­men­ded products or parts are ac­tu­ally re­cycled. Coca-Cola provided a re­port from Sticht­ing Ned­vang, which re­gisters the col­lec­tion and re­cyc­ling of all pack­aging waste in the Neth­er­lands, show­ing that 70% of small bottles in the Neth­er­lands are re­cycled and a part of those bottles are used in new bottles. The ACC con­sidered this suf­fi­cient evid­ence to meet the cri­ter­ia of Art­icle 10 CEA. Con­clu­sion The above ex­amples show that sus­tain­ab­il­ity claims re­quire care­ful con­sid­er­a­tion since Dutch reg­u­lat­ors, con­sumers and or­gan­isa­tions pay close at­ten­tion to these claims. Or­gan­isa­tions that are act­ive in the Neth­er­lands are ad­vised to re­con­sider the use of cer­tain sus­tain­ab­il­ity claims and as­sess wheth­er they can demon­strate the ac­cur­acy of these claims when re­ques­ted.
12 May 2021
Sus­tain­ab­il­ity and Com­pet­i­tion Law
Over the last year, there has been in­creased in­terest and ap­pet­ite from dif­fer­ent mar­ket play­ers and com­pet­i­tion reg­u­lat­ors in the in­ter­ac­tion between sus­tain­ab­il­ity and com­pet­i­tion law. This has led to the de­vel­op­ment of com­ment­ary from dif­fer­ent sources, and guid­ance pa­pers from some of the more pro-act­ive reg­u­lat­ors. The move­ment is linked to the EU’s strong com­mit­ment to sus­tain­ab­il­ity and to be­com­ing the first cli­mate-neut­ral con­tin­ent in the world through the Com­mis­sion’s am­bi­tious European Green Deal. A num­ber of re­cur­ring ques­tions are gain­ing at­ten­tion in re­la­tion to calls for com­pet­i­tion laws to sup­port sus­tain­ab­il­ity ini­ti­at­ives. On the one hand, some play­ers pro­pose that com­pet­i­tion law holds back sus­tain­ab­il­ity col­lab­or­a­tion ini­ti­at­ives. On the oth­er hand, some reg­u­lat­ors have also high­lighted that they have not been ap­proached with con­crete sus­tain­ab­il­ity col­lab­or­a­tion is­sues or pro­pos­als by in­dustry. A con­cern raised by reg­u­lat­ors is wheth­er un­der­tak­ings would really be more eco-friendly if com­pet­i­tion rules were re­laxed, or if leav­ing "green" de­vel­op­ments to the devices of a more com­pet­it­ive mar­ket would lead to green­er res­ults in prac­tice.A cent­ral ques­tion is how to meas­ure any per­ceived "ef­fi­cien­cies" versus anti-com­pet­it­ive ef­fects. An­oth­er is wheth­er there is really any need to es­tab­lish a "safe har­bour" for "sus­tain­able" col­lab­or­at­ive ar­range­ments. Tra­di­tion­ally, com­pet­i­tion law rules on col­lab­or­a­tion look at the ef­fects on the con­sumer in the rel­ev­ant mar­ket (i.e. the con­sumer who pur­chased the product). This is to as­sess wheth­er they have been fully com­pensated. However, sus­tain­ab­il­ity be­ne­fits are more likely to trans­late in­to a com­bin­a­tion of some dir­ect be­ne­fit to the in­di­vidu­al con­sumer, with oth­er be­ne­fits be­ing en­joyed by the wider so­ci­ety at large, or even by the fu­ture wider so­ci­ety at large. As­pects of sus­tain­ab­il­ity ar­gu­ments in re­la­tion to mer­ger con­trol and state aid are also gain­ing in­creased at­ten­tion.It is there­fore a good time to take stock of where we are with the dif­fer­ent ini­ti­at­ives and de­vel­op­ments across Europe so far: European Uni­on The Com­mis­sion’s DG Com­pet­i­tion re­cently looked more closely in­to sus­tain­ab­il­ity and com­pet­i­tion law. It is spe­cific­ally re­cog­nised by EVP Vestager that as part of the European Green Deal "All of Europe’s policies – in­clud­ing com­pet­i­tion policy – will have their role to play to get us there". EU Com­pet­i­tion policy already sup­ports the Green Deal ob­ject­ives, but it has been re­cog­nised that as Europe’s am­bi­tions shift "in­to a high­er gear, we need to see if com­pet­i­tion policy could do more". Ac­cord­ingly, a num­ber of con­sulta­tions on ex­ist­ing com­pet­i­tion le­gis­la­tion were launched over the last year, in­volving po­ten­tial sus­tain­ab­il­ity as­pects. These in­cluded the re­vi­sion of the frame­work for both ho­ri­zont­al and ver­tic­al agree­ments, and the re­vi­sion of state aid rules.Re­cently, DG Comp also act­ively ad­dressed the top­ic of sus­tain­ab­il­ity as a sub­ject in its own right. To this end, it launched a de­tailed con­sulta­tion in the second half of 2020, en­titled "Com­pet­i­tion Policy Sup­port­ing the Green Deal", and en­cour­aged all in­ter­ested stake­hold­ers to con­trib­ute. This ini­ti­at­ive provided an in­sight­ful set of ques­tions look­ing for views on state aid, an­ti­com­pet­it­ive agree­ments and mer­ger con­trol (while ex­clud­ing ab­use of dom­in­ance). It pub­lished the 189 con­sulta­tion re­sponses re­ceived in Janu­ary 2021.DG Comp also hos­ted a half-day pub­lic we­bin­ar on the sub­ject of Com­pet­i­tion policy and the Green Deal in Feb­ru­ary 2021. This dis­cussed a vari­ety of is­sues in­clud­ing an open­ing ad­dress by EVP Vestager and a key­note speech by EVP Tim­mer­mans. It also hos­ted a num­ber of dif­fer­ent pan­els look­ing at polit­ic­al am­bi­tion; in­nov­a­tion, green growth and the com­pet­i­tion rules; and what the cur­rent an­ti­trust, mer­ger con­trol, and state aid rules do de­liv­er, and what they don’t. An un­der­tak­ing was made for the three next im­port­ant fol­low up steps in DG Comp’s sus­tain­ab­il­ity jour­ney. The first is a pub­lic re­port on the in­put from the sus­tain­ab­il­ity con­sulta­tion pro­cess and de­bate, prom­ised be­fore the sum­mer of 2021. The second is to feed in­to the on­go­ing le­gis­lat­ive re­views. Last but not least, the third is the op­por­tun­ity to re­quest sus­tain­ab­il­ity guid­ance through guid­ance let­ters, or Art­icle 10 (Reg 1/2003) de­cisions. At the mo­ment, ma­jor changes to the EU leg­al frame­work seem un­likely. In his clos­ing re­marks for the we­bin­ar, Head of DG Com­pet­i­tion Olivi­er Guersent hin­ted at green ad­just­ments and cla­ri­fic­a­tions to re­flect sus­tain­ab­il­ity ob­ject­ives, rather than a re­lax­a­tion of com­pet­i­tion rules. Cla­ri­fic­a­tions will es­pe­cially con­cern co-op­er­a­tion and in­form­a­tion shar­ing. It is clear that we are not yet at the stage of com­mit­ted spe­cif­ic EU guidelines on sus­tain­ab­il­ity, and that there is still an im­port­ant choice to be made in the path to take. However, DG Comp has clearly il­lus­trated its ser­i­ous­ness and com­mit­ment to un­der­tak­ing a de­tailed and thor­ough eval­u­ation of how to pro­ceed. Neth­er­lands The road to sus­tain­ab­il­ity is paved with good in­ten­tions in the Neth­er­lands. In the re­cent past, the Dutch Au­thor­ity for Con­sumers and Mar­kets ("ACM") had been ac­cused of block­ing sus­tain­ab­il­ity ini­ti­at­ives due to an old-fash­ioned and overly ri­gid ap­proach to com­pet­i­tion law. It had not­ably con­sidered that the car­tel pro­hib­i­tion pre­ven­ted cross-sec­tor co­oper­a­tion re­gard­ing the selling of chick­en meat pro­duced un­der en­hanced an­im­al wel­fare-friendly con­di­tions (Chick­en of To­mor­row) and pre­ven­ted col­lab­or­a­tion in clos­ing down pol­lut­ing coal power plants. This ex­per­i­ence might have in­duced the Dutch com­pet­i­tion au­thor­ity to play an in­nov­at­ive role in the European de­bate on sus­tain­ab­il­ity and com­pet­i­tion law.In the sum­mer of 2020, the ACM launched a con­sulta­tion for re­vised guidelines on sus­tain­ab­il­ity, in­ten­ded to re­place its 2014 Vis­ion doc­u­ment on Com­pet­i­tion and Sus­tain­ab­il­ity. This was quickly fol­lowed by an­oth­er con­sulta­tion on guidelines for (mis­lead­ing) sus­tain­ab­il­ity claims. Ad­di­tion­ally, in Septem­ber 2020, it pub­lished a study that "Today's chick­en" is bet­ter off and its meat more sus­tain­able, even without cross-sec­tor col­lab­or­a­tion agree­ments. The ACM’s draft guidelines on sus­tain­ab­il­ity were per­ceived as bold and drew re­ac­tions, in­clud­ing from the European Com­mis­sion. On 26 Janu­ary 2021, a second draft of the ACM’s re­vised guidelines on sus­tain­ab­il­ity was pub­lished "ready for fur­ther dis­cus­sions in Europe". ACM an­nounced that dur­ing the dis­cus­sions it would not fine com­pan­ies that fol­lowed these draft guidelines in good faith.In the fi­nal draft, the ACM makes a clear­er dis­tinc­tion between "en­vir­on­ment­al-dam­age" agree­ments and oth­er "sus­tain­ab­il­ity" agree­ments. En­vir­on­ment­al-dam­age agree­ments con­cern the re­duc­tion of dam­age to so­ci­ety (not in­cluded in the price of pro­duc­tion) and more ef­fi­cient use of scarce nat­ur­al re­sources. This in­cludes en­vir­on­ment­al as­pects like glob­al warm­ing and re­duced biod­iversity. Sus­tain­ab­il­ity agree­ments are defined in the draft re­vised guidelines as be­ing aimed at the iden­ti­fic­a­tion, pre­ven­tion, re­stric­tion or mit­ig­a­tion of the neg­at­ive im­pact of eco­nom­ic activ­it­ies on people, an­im­als, the en­vir­on­ment, or nature. One of the most in­ter­est­ing con­cepts from a com­pet­i­tion law per­spect­ive is the ACM's point of view that a dif­fer­ent in­ter­pret­a­tion can be ap­plied to the nor­mal "ef­fi­ciency claim" that users should be al­lowed a fair share of the be­ne­fits of an agree­ment. In con­trast, the ACM states that it should be pos­sible to con­sider the be­ne­fits of parties oth­er than dir­ect users, such as the great­er pub­lic (e.g. in re­la­tion to the re­duc­tion of CO2-emis­sions). Wheth­er the fi­nal draft guidelines on sus­tain­ab­il­ity will re­ceive full sup­port from the European Com­mis­sion is still to be seen. Mean­while, the ACM's guidelines for (mis­lead­ing) sus­tain­ab­il­ity claims was launched sep­ar­ately on 28 Janu­ary 2021 and will serve as basis for en­force­ment by the ACM's con­sumer rights de­part­ment. United King­dom In the UK, the Com­pet­i­tion and Mar­kets Au­thor­ity ("CMA") has re­tained "cli­mate change and sup­port­ing the trans­ition to a low car­bon eco­nomy" as one of its pri­or­it­ies for 2021/2022. However, the steps taken by the CMA to date have been lim­ited. One area of fo­cus has been con­sumer pro­tec­tion – the launch­ing of a new pro­gramme of work at the end of 2020 to ex­am­ine mis­lead­ing en­vir­on­ment­al claims. The CMA has also launched a mar­ket study in­to elec­tric vehicle char­ging, which will con­clude by the end of 2021. The CMA has been one of the few com­pet­i­tion au­thor­it­ies to pub­lish ded­ic­ated guid­ance on en­vir­on­ment­al sus­tain­ab­il­ity agree­ments and com­pet­i­tion law. However, this guid­ance only sum­mar­ises the ex­ist­ing rules for self-as­sess­ing com­pli­ance with com­pet­i­tion law, and does not at­tempt to tackle some of the more chal­len­ging ques­tions in this area. The CMA has ac­know­ledged that this guid­ance is an "in­ter­im step", which sug­gests it will likely take fur­ther steps in this area.In its re­cently up­dated Mer­ger As­sess­ment Guidelines, the CMA has in­cluded en­vir­on­ment­al sus­tain­ab­il­ity as a re­cog­nised pos­sible rel­ev­ant "cus­tom­er be­ne­fit" (in­clud­ing to fu­ture cus­tom­ers) to be taken in­to ac­count in the as­sess­ment of a mer­ger. This is an in­ter­est­ing de­vel­op­ment, and one of the first "nods" to­wards sus­tain­ab­il­ity mer­ger ar­gu­ments by com­pet­i­tion reg­u­lat­ors. The CMA con­firmed that it is able to take in­to ac­count a broad­er range of ef­fi­cien­cies and be­ne­fits from a mer­ger as they ap­ply to con­sumers and so­ci­ety more gen­er­ally, in­clud­ing wheth­er a mer­ger may lead to a lower car­bon foot­print for the firm’s products. Con­clu­sion Policy op­tions on the ap­plic­a­tion of com­pet­i­tion laws to sus­tain­ab­il­ity agree­ments are still open, with some na­tion­al au­thor­it­ies (i.e. the Dutch ACM, but also the Greek HCC com­pet­i­tion reg­u­lat­or) lead­ing the way or at least giv­ing the busi­ness and leg­al com­munity (sus­tain­able) food for thought.As policy-mak­ing is in­creas­ingly sup­por­ted at both the EU and na­tion­al level by pub­lic con­sulta­tions, there will be many op­por­tun­it­ies for mar­ket play­ers to voice their ideas or con­cerns about this fu­ture-fa­cing is­sue. Do not miss the chance to let your voice be heard!
12 May 2021
Sus­tain­ab­il­ity and gre­en­wash­ing – the Itali­an view
The fight against cli­mate change is a ma­jor chal­lenge for in­dustry.Com­pan­ies in the in­dus­tri­al sec­tor are aware of the in­creased sens­it­iv­ity of con­sumers to sus­tain­ab­il­ity since the en­vir­on­ment­al im­pact of their products is one of the key factors in­flu­en­cing com­mer­cial choices and pur­chas­ing de­cisions. However, be­cause of the grow­ing im­port­ance of the cri­ter­ia by which a product can be con­sidered "sus­tain­able", ad­vert­ising mes­sages em­phas­ising the en­vir­on­ment­al vir­tues of a product with the aim of mak­ing it more at­tract­ive must be for­mu­lated in a way that en­sures con­sumer pro­tec­tion.The Itali­an In­sti­tute of Ad­vert­ising Self-Reg­u­la­tion (Isti­tuto di Autodis­cip­lina Pub­bli­cit­ar­ia – IAP), as the reg­u­lat­ing body for the en­tire ad­vert­ising sec­tor, tackled the is­sue of ad­vert­ising com­mu­nic­a­tions re­gard­ing the pro­tec­tion of the nat­ur­al en­vir­on­ment, in­tro­du­cing in­to its own Code of Reg­u­la­tion a rule that com­mer­cial com­mu­nic­a­tions claim­ing or sug­gest­ing en­vir­on­ment­al or eco­lo­gic­al be­ne­fits must be based on truth­ful, per­tin­ent and sci­en­tific­ally veri­fi­able evid­ence and must al­low for a clear un­der­stand­ing of the char­ac­ter­ist­ics of the ad­vert­ised product or ser­vice, which the claimed be­ne­fits refer to.When ad­vert­ising their products, com­pan­ies of­ten use terms such as "sus­tain­able", "eco­lo­gic­al", "en­vir­on­ment­ally friendly" or "zero im­pact" with the aim of at­tract­ing the at­ten­tion of sus­tain­ab­il­ity-con­scious con­sumers. Gre­en­wash­ing (i.e. the mar­ket­ing strategy of giv­ing an en­vir­on­ment­ally pos­it­ive im­age to a com­pany or a product even in de­fault of ob­ject­ive cri­ter­ia or re­li­able or veri­fi­able sci­entif­ic data) is an ex­ample of mis­lead­ing ad­vert­ising that can res­ult in sanc­tions.Large com­pan­ies op­er­at­ing in the con­sumer products sec­tor are closely reg­u­lated. The Itali­an Com­pet­i­tion Au­thor­ity (Autor­ità Garan­te per la Con­cor­renza ed il Mer­cato – AGCM) plays a key role in pro­tect­ing con­sumers from mis­lead­ing ad­vert­ising in mes­sages pro­mot­ing the en­vir­on­ment­al vir­tues of products that are ac­tu­ally highly un­sus­tain­able.Some not­able de­cisions in­volved min­er­al wa­ter firms present­ing their products as en­vir­on­ment­ally sus­tain­able by us­ing what they claimed to be bet­ter per­form­ing bot­tling ma­ter­i­als (e.g. ones with less plastics) and con­sequently lower amounts of en­ergy in the pro­duc­tion of these ma­ter­i­als. However, in­ad­equate evid­ence for the re­li­ab­il­ity and truth­ful­ness of the ad­vert­ise­ments led the AGCM to rule that the claims were mis­lead­ing.An­oth­er sig­ni­fic­ant case in terms of the fine is­sued (EUR 5 mil­lion) con­cerned a mul­tina­tion­al com­pany in­volved in fuel pro­duc­tion that is­sued an ad­vert­ise­ment claim­ing the pos­it­ive en­vir­on­ment­al im­pact of a cer­tain type of fuel due to its char­ac­ter­ist­ics, fuel sav­ings and re­duc­tions in gas emis­sions. The AGCM found that these claims were not sub­stan­ti­ated.In or­der to avoid the mis­lead­ing ef­fects of Gre­en­wash­ing prac­tices, ad­vert­ising com­mu­nic­a­tions must be ob­ject­ively veri­fi­able or val­id­ated by in­de­pend­ent third parties. All ad­vert­ising about the sus­tain­ab­il­ity of a product must be ap­pro­pri­ate and cor­rect since the erad­ic­a­tion of Gre­en­wash­ing is an im­port­ant part of the glob­al re­sponse to the cur­rent cli­mate emer­gency.
12 May 2021
Cir­cu­lar Eco­nomy: re­cent meas­ures to en­hance re­pair­ab­il­ity of elec­tric...
To say that the Law 2020-105 of Feb­ru­ary 2020 on the Cir­cu­lar Eco­nomy has turned the French mar­ket for elec­tric and elec­tron­ic equip­ment (EEE) up­side down is an un­der­state­ment.The new re­quire­ments spe­cif­ic to the sale of EEE in France are ex­plained be­low. Man­dat­ory Re­pair­ab­il­ity Rat­ing for EEE placed on the French mar­ket The newly in­tro­duced Re­pair­ab­il­ity Rat­ing aims to in­form con­sumers of their abil­ity to re­pair the EEE they ac­quire. It has been man­dat­ory since Janu­ary 2021 al­though France an­nounced there would be no en­force­ment be­fore 2022.The Re­pair­ab­il­ity Rat­ing must be es­tab­lished by the man­u­fac­turer or Im­port­er on the basis of spe­cif­ic cri­ter­ia (such as re­mov­ab­il­ity and the price of spare parts) and com­mu­nic­ated down the dis­tri­bu­tion chain to the con­sumer.  There is no ob­lig­a­tion to in­dic­ate the Re­pair­ab­il­ity Rat­ing dir­ectly on the product it­self or on its pack­aging. Yet, it must be provided to the con­sumer at the time of pur­chase, even for on­line sales. Ad­dress­ing ‘planned ob­sol­es­cence’ The Law on the Cir­cu­lar Eco­nomy has in­tro­duced new pro­vi­sions to bet­ter ad­dress ‘planned ob­sol­es­cence’, defined as the use of tech­niques de­lib­er­ately aimed at re­du­cing a pro­duct's lifespan in or­der to in­crease its re­place­ment rate.Not­ably, the Law in­tro­duced pro­hib­i­tions on tech­niques (in­clud­ing via soft­ware) in­ten­ded to pre­vent re­pair or re­con­di­tion­ing of a device out­side its ap­proved cir­cuits and on agree­ments or prac­tices lim­it­ing ac­cess by in­de­pend­ent pro­fes­sion­al re­pairers to spare parts, in­struc­tions for use, tech­nic­al in­form­a­tion or any means ne­ces­sary for the re­pair of a product.The Law also con­tains spe­cif­ic pro­vi­sions on devices de­signed to al­low self-re­pair. Avail­ab­il­ity of spare parts Un­der the Law, a man­u­fac­turer of a good must provide in­form­a­tion to the dis­trib­ut­or on the avail­ab­il­ity or non-avail­ab­il­ity of spare parts ne­ces­sary to re­pair this good. This in­form­a­tion must be passed down by the dis­trib­ut­or to the con­sumer be­fore the sale.It is man­dat­ory to sup­ply avail­able spare parts to pro­fes­sion­al dis­trib­ut­ors or re­pairers who re­quest them. Be­gin­ning Janu­ary 2022, sup­ply will have to take place with­in 15 work­ing days of a re­quest.Also in Janu­ary 2022, the fol­low­ing re­quire­ments will ap­ply to EEE:For all elec­tric and elec­tron­ic equip­ment, there will be a pre­sump­tion of un­avail­ab­il­ity of spare parts if no in­form­a­tion on avail­ab­il­ity is provided;For house­hold ap­pli­ances, small IT and tele­com­mu­nic­a­tions equip­ment, screens and mon­it­ors, avail­ab­il­ity of spare parts will be­come man­dat­ory for at least five years from the pla­cing on the mar­ket of the last unit;For ‘in­dis­pens­able’ spare parts no longer avail­able that can be man­u­fac­tured by 3D print­ing, man­u­fac­tur­ing plans will have to be provided to pro­fes­sion­al dis­trib­ut­ors or re­pairers upon re­quest wheth­er ap­proved or not;Of­fer­ors of pro­fes­sion­al main­ten­ance and re­pair ser­vices will have to provide at least one of­fer for parts from the cir­cu­lar eco­nomy in­stead of new parts. Right to soft­ware up­dates For goods with di­git­al ele­ments, the Law on the Cir­cu­lar Eco­nomy Law man­dated new re­quire­ments, which are an early trans­pos­i­tion of EU Dir­ect­ive 2019/771 on con­tracts for the sale of goods.These new re­quire­ments cov­er:man­dat­ory in­form­a­tion on soft­ware up­dates (in­clud­ing se­cur­ity up­dates) and their in­stall­a­tion ne­ces­sary to main­tain the con­form­ity of goods with di­git­al ele­ments;the pro­vi­sion of up­dates ne­ces­sary to main­tain the con­form­ity of the goods for up to two years;man­dat­ory in­form­a­tion on the peri­od of time that soft­ware up­dates re­main com­pat­ible with the nor­mal use of the device;pre-con­trac­tu­al in­form­a­tion on the ex­ist­ence of any re­stric­tions on the in­stall­a­tion of soft­ware.Last year, France no­ti­fied the European Com­mis­sion un­der the TRIS pro­ced­ure of an im­ple­ment­ing de­cree on con­sumer in­form­a­tion re­lat­ing to soft­ware up­dates for goods with di­git­al ele­ments. This de­cree will likely be ad­op­ted at the end of the first quarter of 2021.Tech­nic­al Reg­u­la­tion In­form­a­tion Sys­tem or TRIS no­ti­fic­a­tion is re­quired un­der Dir­ect­ive (EU) 2015/1535 and aims to pre­vent bar­ri­ers to the in­tern­al mar­ket, which are likely to be cre­ated by the in­tro­duc­tion of new na­tion­al tech­nic­al reg­u­la­tions. What to ex­pect next Al­though the im­ple­ment­ing de­crees of the Law on the Cir­cu­lar Eco­nomy have not yet all been ad­op­ted, France's par­lia­ment is cur­rently de­bat­ing a new bill on the “En­vir­on­ment­al Foot­print of Di­git­al Tech­no­logy”, which in­tends to lim­it the re­new­al of di­git­al devices by tak­ing even more drastic steps such as:re­quir­ing man­u­fac­tur­ers of elec­tron­ic devices to of­fer cor­rect­ive up­dates for up to five years;al­low­ing con­sumers, who have in­stalled an up­date to soft­ware sup­plied at the time of pur­chase, the abil­ity to re­store pre­vi­ous ver­sions of this soft­ware for up to two years;or ex­tend­ing the leg­al guar­an­tee of con­form­ity for di­git­al equip­ment from two to five years.If you would like to know more about the Law on Cir­cu­lar eco­nomy, con­sult our full dossier on­line.
12 May 2021
Turk­ish Eco­l­a­bel pro­motes re­spons­ible products and the en­vir­on­ment
The 'E­col­a­bel' sign is a vol­un­tary re­ward sys­tem that is avail­able in Tur­key and coun­tries around the world, which pro­motes en­vir­on­ment­ally friendly products and provides con­sumers with val­id and ac­cur­ate sci­entif­ic in­form­a­tion about the products. Back­ground: Eco­l­a­bel comes to Tur­key The in­ter­na­tion­al Eco­l­a­bel vol­un­tary re­ward sys­tem was in­tro­duced in Tur­key on 19 Oc­to­ber 2018 with the en­act­ment of the "Eco­l­a­bel Reg­u­la­tion" (“Reg­u­la­tion”).The Reg­u­la­tion is the primary le­gis­la­tion en­for­cing the Eco­l­a­bel sys­tem in Tur­key and is im­ple­men­ted and mon­itored by the Min­istry of En­vir­on­ment and Urb­an­isa­tion ("Min­istry") and the Gen­er­al Dir­ect­or­ate of En­vir­on­ment­al Im­pact As­sess­ment, Per­mits and In­spec­tions.Any product or ser­vice pro­duced and dis­trib­uted in Tur­key and im­por­ted in­to or ex­por­ted from Tur­key must meet the stand­ards of the Turk­ish sys­tem in or­der to be al­lowed to carry an Eco­l­a­bel.   The Reg­u­la­tion not only sets out the cri­ter­ia for as­sess­ing products and ser­vices. It also em­phas­ises that meas­ures and in­cent­ives should be taken to in­crease de­mand for eco-labeled products and ser­vices, and states that eco-labeled products and ser­vices should be giv­en pref­er­ence in pub­lic pro­cure­ment, as part of the over­all ef­fort to raise aware­ness of the des­ig­na­tion. What it takes to hold an Eco­l­a­bel The cri­ter­ia used to award an Eco­l­a­bel are dif­fer­ent for each product and ser­vice group. These cri­ter­ia aim at max­im­ising en­vir­on­ment­al per­form­ance by con­sid­er­ing the en­tire life cycle of a par­tic­u­lar ser­vice or product. When set­ting the cri­ter­ia for a group, of­fi­cials must as­sess wheth­er a par­tic­u­lar product or ser­vice does the fol­low­ing:Re­duces en­ergy con­sump­tion that af­fects cli­mate change and biod­iversity, and pro­motes re­new­able en­ergy;Gen­er­ates waste and pol­lu­tion that af­fects the en­vir­on­ment, in­clud­ing the dis­pers­al of emis­sions and pol­lut­ants;Mod­i­fies sub­stances harm­ful to health and the en­vir­on­ment and cre­ates safer sub­stances and pro­duc­tion meth­ods where tech­nic­ally feas­ible;Min­im­ises the en­vir­on­ment­al im­pact of products and ser­vices by ex­tend­ing their life and designs products so that they can be re­used;Bal­ances en­vir­on­ment­al be­ne­fits and harm while en­sur­ing that spe­cif­ic health and safety stand­ards are achieved at each stage of the life cycle of a product or ser­vice;Meets the stand­ards of TS EN ISO 14024 Type I En­vir­on­ment­al Im­pacts, Prin­ciples and Meth­ods and those of oth­er eco-labeled products;Con­siders as­so­ci­ated use and re­duces an­im­al test­ing as much as pos­sible. Ap­plic­a­tion To ob­tain an Eco­l­a­bel, a com­pany must ap­ply to the Min­istry. All ap­plic­a­tions must con­tain the ne­ces­sary in­form­a­tion and doc­u­ment­a­tion. Gen­er­ally, the fol­low­ing groups can ap­ply for an Eco­l­a­bel: pro­du­cers, man­u­fac­tur­ers, im­port­ers, ex­port­ers, ser­vice pro­viders, whole­salers and re­tail­ers, per­sons and in­sti­tu­tions. Upon ap­plic­a­tion, the Min­istry forms a com­mis­sion that pre­pares a tech­nic­al as­sess­ment re­port on wheth­er the ap­plic­ant's ser­vice or product meets Eco­l­a­bel cri­ter­ia. The re­port of this com­mis­sion is then sub­mit­ted to the Min­istry, which makes a fi­nal de­cision on the mat­ter, but may con­duct an in­vest­ig­a­tion or ob­tain ad­di­tion­al re­search if it deems it ne­ces­sary.Ac­cord­ing to the Reg­u­la­tion, the Min­istry may re­ject an ap­plic­a­tion in the fol­low­ing cases:If the product con­tains sub­stances clas­si­fied as tox­ic, dan­ger­ous to the en­vir­on­ment, car­ci­no­gen­ic, muta­gen­ic or tox­ic for re­pro­duc­tion un­der the Clas­si­fic­a­tion, La­beling and Pack­aging of Sub­stances and Mix­tures Reg­u­la­tion (Of­fi­cial Gaz­ette, 11 Decem­ber 2013).If the product con­tains chem­ic­als as defined in Art­icle 47 of the Reg­u­la­tion on the Re­gis­tra­tion, Eval­u­ation, Au­thor­isa­tion and Re­stric­tion of Chem­ic­als (Of­fi­cial Journ­al, 23 June 2017).If the product is one of the fol­low­ing: veter­in­ary and med­ic­al products, devices and tools as defined in the Med­ic­al Devices Or­din­ance (Of­fi­cial Gaz­ette, 7 June 2011) and the Veter­in­ary Products Or­din­ance (Of­fi­cial Gaz­ette, 24 Decem­ber 2011).If the product is feed or a food product. Con­clu­sion of an agree­ment and use of the Eco­l­a­bel Upon con­clu­sion of an agree­ment between the Min­istry and an eli­gible ap­plic­ant, that ap­plic­ant will be awar­ded an Eco­l­a­bel. In ad­di­tion to the cri­ter­ia that are clearly defined for each product or ser­vice group, the Min­istry may im­pose ad­di­tion­al ob­lig­a­tions through an agree­ment. The own­er of the Eco­l­a­bel must use the sign in ac­cord­ance with the Reg­u­la­tion and the terms of the agree­ment. If an own­er vi­ol­ates the agree­ment, the Min­istry may uni­lat­er­ally ter­min­ate it and re­voke per­mis­sion to use the Eco­l­a­bel des­ig­na­tion. In ad­di­tion, the own­er of an Eco­l­a­bel may uni­lat­er­ally ter­min­ate the agree­ment and re­nounce the right to use the Eco­l­a­bel by giv­ing three months' no­tice. The own­er of an Eco­l­a­bel must not pro­duce or be as­so­ci­ated with any ad­vert­ise­ment, state­ment, sign or logo, which is fac­tu­ally in­cor­rect, mis­lead­ing or dam­ages the in­teg­rity of the Eco­l­a­bel scheme. In ad­di­tion, the Min­istry may con­duct in­vest­ig­a­tions in­to the use of an Eco­l­a­bel at any time.
12 May 2021
Sus­tain­ab­il­ity and gre­en­wash­ing – the Ger­man view
"Re­cyc­lable", "car­bon neut­ral" or "bio­de­grad­able" – these la­bels re­veal how sus­tain­ab­il­ity plays a ma­jor role in ad­vert­ising. However, the lack of uni­form stand­ards and clear reg­u­la­tions makes it dif­fi­cult for com­pan­ies to en­sure full leg­al com­pli­ance when ad­vert­ising the en­vir­on­ment­al be­ne­fits of their products.Where­as in the past, price and qual­ity alone were of­ten the most rel­ev­ant factors for con­sumers when mak­ing a pur­chas­ing de­cision, the sus­tain­ab­il­ity of products and the sus­tain­ab­il­ity policies of com­pan­ies have be­come in­creas­ingly im­port­ant. Know­ing this, many com­pan­ies ad­vert­ise their products with a wide vari­ety of sus­tain­ab­il­ity claims that are sup­posed to show en­vir­on­ment­al friend­li­ness and cor­res­pond­ing cor­por­ate re­spons­ib­il­ity. Leg­ally, how­ever, such "sus­tain­ab­il­ity claims" are of­ten a chal­lenge. What ex­actly do claims such as "bio­de­grad­able" or "en­vir­on­ment­ally friendly" mean? And what re­quire­ments must be met in or­der to ad­vert­ise a product in this way? Sus­tain­able pro­duc­tion: "car­bon neut­ral" and "re­source friendly" The range of ad­vert­ising claims re­fer­ring to the en­vir­on­ment­ally friendly pro­duc­tion of goods is broad, ran­ging from rather vague state­ments such as "re­source friendly" to strong claims such as "CO2-neut­ral". From an ad­vert­ising law per­spect­ive, the first ques­tion to con­sider is con­sumer per­cep­tion of vague claims. Does "re­source friendly" mean that few­er raw ma­ter­i­als have been used or that the ma­ter­i­als used are more en­vir­on­ment­ally friendly? Does the claim refer to the use of less en­ergy or en­ergy that has been sus­tain­ably ob­tained? If the ad­vert­iser is not spe­cif­ic in its state­ments, he runs the risk of cre­at­ing mul­ti­fa­ceted mes­sages, which he must prove. Even sup­posedly clear state­ments such as "car­bon neut­ral", how­ever, re­quire closer ex­am­in­a­tion. Does this state­ment refer solely to pro­duc­tion on the ad­vert­iser­'s premises? Does it in­clude the ex­trac­tion of raw ma­ter­i­als, the lo­gist­ics across all dis­tri­bu­tion chains and also even­tu­al dis­pos­al? Is the com­pens­a­tion of car­bon di­ox­ide through the sup­port of cli­mate pro­jects per­miss­ible or must there be no car­bon di­ox­ide emis­sions?The ad­vert­iser must con­sider these ques­tions and the ex­pect­a­tions of con­sumers be­fore launch­ing a cam­paign. Ger­man case law shows that to prove the cor­rect­ness of ad­vert­ising it is not suf­fi­cient if ex­pert opin­ion is only offered dur­ing the tri­al. Sus­tain­able dis­pos­al: "com­postable" and "re­cyc­lable" Yel­low bin, brown bin, home com­post – many con­sumers are happy to con­trib­ute to sus­tain­ab­il­ity by sep­ar­at­ing waste in this way. Claims around "com­postable", "bio­de­grad­able" and "re­cyc­lable" are there­fore very pop­u­lar. The first ques­tion here is how to prove that a product meets the tech­nic­al re­quire­ments for re­cyc­ling or com­post­ing. DIN stand­ards are of­ten used for this pur­pose. Some­times, how­ever, the stand­ard that ap­plies is un­clear or a DIN stand­ard does not yet ex­ist for a par­tic­u­lar pro­cess, such as home com­post­ing.An­oth­er chal­lenge is the real­ity of waste man­age­ment. Even if a product meets the tech­nic­al re­quire­ments to be in­dus­tri­ally com­pos­ted or re­cycled, this does not auto­mat­ic­ally mean that such com­post­ing or re­cyc­ling ac­tu­ally takes place in prac­tice. Many of the ap­prox­im­ately 1,000 loc­al waste man­age­ment com­pan­ies in Ger­many do not yet have the tech­nic­al pre­requis­ites to ac­tu­ally re­cycle or com­post products dis­posed of via the yel­low or brown bins. Some fa­cil­it­ies are not set up for the long com­post­ing time or can­not re­cog­nise re­cyc­lable ma­ter­i­al. Ger­man courts are in­creas­ingly crit­ic­al of blanket claims about the com­posta­bil­ity and re­cyc­lab­il­ity of products, un­less it can be shown that such sus­tain­able ways of waste dis­pos­al are not only tech­nic­ally pos­sible but ac­tu­ally do take place. De­pend­ing on the in­di­vidu­al case, cla­ri­fy­ing in­form­a­tion (i.e. dis­claim­ers) should be used on the pack­aging to avoid the risk of mis­lead­ing ad­vert­ising. EU Com­mis­sion's "Green Deal" In­creas­ingly, sus­tain­ab­il­ity ad­vert­ising and claims are likely to be reg­u­lated. For the food in­dustry in par­tic­u­lar, stricter re­quire­ments at the EU level must be ex­pec­ted in the com­ing years.As part of the "European Green Deal" presen­ted in Decem­ber 2019, the EU Com­mis­sion has an­nounced a series of meas­ures to pro­mote the de­vel­op­ment of a sus­tain­able eco­nomy while set­ting uni­form rules and stand­ards. One of these meas­ures is the "From farm to fork" strategy. Among oth­er things, this strategy en­vis­ages that the Com­mis­sion will de­vel­op a uni­form leg­al frame­work for sus­tain­ab­il­ity ad­vert­ising and for the la­belling of sus­tain­able food. A leg­al frame­work for an an­im­al wel­fare la­bel is also to be cre­ated and the com­puls­ory nature of such a la­bel will be ex­amined. However, de­tails are still un­clear. The Com­mis­sion in­tends to sub­mit ini­tial reg­u­lat­ory pro­pos­als only in 2024.Over­all, nu­mer­ous leg­al ques­tions arise when product ad­vert­ise­ments in­clude "sus­tain­ab­il­ity claims". Much is still in flux here. Court de­cisions and new leg­al reg­u­la­tions are likely to tight­en the re­quire­ments in the com­ing years and hope­fully bring more clar­ity.
12 May 2021
Spot­light on Sus­tain­ab­il­ity - Con­sumer Products News­let­ter
Wel­come to our brand new edi­tion of the CMS Con­sumer Products News­let­ter!
12 May 2021
France's pen­alty for the use of green dot may not con­form with EU law –...
The Con­seil d'Etat (French Su­preme Ad­min­is­trat­ive Court) has sus­pen­ded the texts in­tro­du­cing a pen­alty for the use of the Green Dot mark in France as of 1 April 2021, fol­low­ing an ap­plic­a­tion for in­ter­im meas­ures by sev­er­al ma­jor trade as­so­ci­ations and the hold­er and li­censor of the Green Dot mark in the EU. Among the many meas­ures of law N° 2020-105 of 10 Feb­ru­ary 2020 aimed at pro­mot­ing a cir­cu­lar eco­nomy (the AGEC Law), France has in­tro­duced new product-mark­ing ob­lig­a­tions. Spe­cific­ally, France im­posed Tri­m­an mark­ing and a har­mon­ised Info-Tri as of 1 Janu­ary 2022. Con­versely, Art­icle L. 541-10-3 of the French En­vir­on­ment Code in its ver­sion linked to the AGEC Law spe­cific­ally provides that "signs and mark­ings that may lead to con­fu­sion as to the sort­ing or de­liv­ery rule for waste from the product" would be sub­ject to a pen­alty that would at least double the cost of the eco-con­tri­bu­tion due for waste man­age­ment by an eco-or­gan­isa­tion. Al­though the Green Dot was not named, the Min­is­ter of En­vir­on­ment's Or­der of 30 Novem­ber 2020, which was man­dated by this law, de­scribes pre­cisely and solely the Green Dot sign. The pen­alty for us­ing this sign is set out in the An­nex to the Or­der of 25 Decem­ber 2020 on the eco-or­gan­isa­tions of the house­hold pack­aging sec­tor. This an­nex goes in­to force on 1 April, ex­cept for cer­tain pack­aging ex­empt from sanc­tions dur­ing the trans­ition peri­od provided for in the or­der.On 15 March, the Con­seil d’Etat sus­pen­ded the ap­plic­a­tion of Or­der of 30 Novem­ber 2020 and the pro­vi­sions of the An­nex to the Or­der of 25 Decem­ber 2020, pending a de­cision on the mer­its of their leg­al­ity. In the light of the pre­lim­in­ary in­vest­ig­a­tion in­to the case, the Con­seil d’Etat ex­pressed ser­i­ous doubts about the leg­al­ity and pro­por­tion­al­ity of the con­tested pro­vi­sions in the light of EU law, and more par­tic­u­larly in light of Art­icle 34 of the TFEU, which pro­hib­its meas­ures hav­ing equi­val­ent ef­fect to a quant­it­at­ive re­stric­tion on im­ports.In this re­spect, the Con­seil d’Etat noted that, al­though it is in­dis­crim­in­ately ap­plic­able to all products mar­keted on the French mar­ket, wheth­er man­u­fac­tured in France or im­por­ted, the Green Dot pen­alty makes pack­aging bear­ing this sign more ex­pens­ive. This pen­alty thus has the ob­ject and ef­fect of dis­suad­ing pro­du­cers from us­ing this pack­aging in France by for­cing them to provide dif­fer­ent pack­aging with­in the EU – the Green Dot be­ing man­dat­ory in Spain and Cyprus – and to or­gan­ise com­part­ment­al­ised dis­tri­bu­tion cir­cuits. The Con­seil d'Etat noted that such pro­vi­sions can­not be re­garded as simple sales meth­ods, since the pres­sure they ex­ert on pro­du­cers af­fects the char­ac­ter­ist­ics of the products. Fur­ther­more, the Coun­cil of State con­sidered that the Min­istry of Eco­lo­gic­al Trans­ition did not provide proof that the dis­ap­pear­ance of the Green Dot sign would, on its own, change sort­ing habits or that any mis­un­der­stand­ing over the mean­ing of the "Green Dot" could be cor­rec­ted with less re­strict­ive meas­ures, such as is­su­ing ad­equate in­form­a­tion. Con­seil d'Etat, Ord. Référé, 15 March 2021, n°450160 et 450164, AFISE ao.Con­seil d'Etat, Ord. Référé, 15 March 2021, n°450160 et 450164, So­ciété Der Grüne Punkt Duales Sys­tem ao.
12 May 2021
Clean Meat: sus­tain­ab­il­ity re­volu­tion or vic­tim of reg­u­la­tion?
When it comes to sus­tain­able food, Clean Meat (i.e In-Vitro or Cul­tured Meat) is con­sidered by many to be the fu­ture. But al­though Clean Meat is prom­ising in terms of sus­tain­ab­il­ity and new sales mar­kets, the reg­u­lat­ory hurdles that pro­du­cers and re­tail­ers must over­come be­fore en­ter­ing the EU mar­ket are many and var­ied. This art­icle ex­am­ines the chal­lenges arising from the European Nov­el Food Reg­u­la­tion, European GMO law, and the spe­cial Ger­man re­quire­ments for the la­belling and ad­vert­ising of non-tra­di­tion­al meat products. A. Products and stage of de­vel­op­ment In the EU, tech­nic­al mar­ket­ab­il­ity of Clean Meat is with­in reach. Ar­ti­fi­cially pro­duced chick­en meat was re­cently ap­proved in Singa­pore. In 2013, a re­search team from Maastricht Uni­versity presen­ted its first bur­ger from the lab. While the pro­duc­tion costs at that time amoun­ted to EUR 250,000, a clean bur­ger can now be sold for less than USD 10. When they go on sale, costs should de­crease even more (in Ju­ly 2020, a prom­in­ent Clean Meat com­pany in the Neth­er­lands an­nounced that its cost of pro­duc­tion had fallen by 88%).The ad­vant­ages of Clean Meat are man­i­fold and could out­per­form con­ven­tion­al meat products on  every level: CO2 emis­sions are re­duced, fact­ory farm­ing is not ne­ces­sary and nat­ur­al re­sources are saved. Con­sum­ing Clean Meat can also be health­i­er for the con­sumer since there is less risk of con­tam­in­ants (e.g. no an­ti­bi­ot­ics are used) and the amount of cho­les­ter­ol is lower. The shift to Clean Meat is a re­sponse to in­creased de­mand for meat as meat con­sump­tion stead­ily grows, great­er sens­it­iv­ity for an­im­al wel­fare and the fight against cli­mate change. It is there­fore not sur­pris­ing that there is also strong in­vest­ment in Clean Meat in the EU. A European Clean Meat start-up at­trac­ted in­vest­ments totalling nearly nine fig­ures. B. Reg­u­la­tion on ge­net­ic­ally mod­i­fied food When it comes to selling Clean Meat in the EU, the first ques­tion to be answered is: Does the food con­tain ge­net­ic­ally mod­i­fied or­gan­isms (GMOs)? If the an­swer is yes, the food must be au­thor­ised by the European Com­mis­sion.In gen­er­al, it can be said that when it comes to mar­ket­ing food in the EU, there are hardly any high­er hurdles than those set by the GMF Reg­u­la­tion. The ap­prov­al pro­ced­ure of the EU Com­mis­sion is com­plex and time-con­sum­ing. Tak­ing in­to ac­count the time and ef­fort re­quired for the ap­plic­a­tion (in­clud­ing the per­form­ance of stud­ies, etc.), the par­ti­cip­a­tion of na­tion­al au­thor­it­ies, the as­sess­ment by the European Food Safety Au­thor­ity (EF­SA) and the ap­prov­al by the EU Com­mis­sion, the ap­prov­al pro­cess may be con­sid­er­ably longer than 12 months. In in­di­vidu­al cases, ap­prov­al may take years.However, des­pite the hurdles and re­quired ef­fort, good pre­par­a­tion, pro­fes­sion­al know-how and the right part­ners can bring suc­cess. C. Nov­el Food Reg­u­la­tion Even though Clean Meat does not con­tain ge­net­ic­ally mod­i­fied ma­ter­i­al, it re­quires ap­prov­al. This is be­cause in al­most all cases Clean Meat qual­i­fies as Nov­el Food in the sense of the Nov­el Food Reg­u­la­tion (see state­ment of the EU Com­mis­sion). These re­quire­ments are slightly less strict than those set down in the ge­net­ic en­gin­eer­ing law. An ap­prov­al is gran­ted to a nov­el food if it does not pose a safety risk to hu­man health, does not mis­lead con­sumers and, if it is in­ten­ded to re­place an­oth­er food, does not dif­fer from it in a way that would cause nu­tri­tion­al dis­ad­vant­ages for in­di­vidu­als when con­sumed nor­mally.Also, in con­nec­tion with the au­thor­isa­tion of a nov­el food, the dur­a­tion of the ap­prov­al pro­ced­ure must be taken in­to ac­count. Ac­cord­ing to of­fi­cial in­form­a­tion, it can take 18 to 24 months for a nov­el food product to re­ceive fi­nal ap­prov­al (or to be re­jec­ted). While this is a long time (es­pe­cially con­sid­er­ing that the products may not be mar­keted in the EU in the mean­time), pa­tience will be re­war­ded. In the event of ap­prov­al, the ap­plic­ant can ob­tain an ex­clus­ive right of use for five years in or­der to amort­ise de­vel­op­ment and ap­plic­a­tion costs.A food busi­ness op­er­at­or should not fear hav­ing to go through both pro­cesses (i.e. GMF Reg­u­la­tion and Nov­el Food Reg­u­la­tion). If GMO ap­prov­al is re­quired, Nov­el Food Reg­u­la­tion ap­prov­al is not ne­ces­sary. D. La­belling and ad­vert­ising The la­belling and ad­vert­ising of Clean Meat is a  na­tion­al is­sue. Al­though European Law (i.e. Food In­form­a­tion Reg­u­la­tion (EU) 1169/2011 [FIR] and Un­fair Com­mer­cial Prac­tices Dir­ect­ive 2005/29/EC) com­pre­hens­ively reg­u­lates food la­belling and ad­vert­ising law, the ques­tion of wheth­er the con­sumer un­der­stands la­bels and ad­vert­ising is de­term­ined by na­tion­al stand­ards. The ques­tion of how a food­stuff is to be named and how it may be ad­vert­ised can only be answered in each mem­ber state. In the fol­low­ing sec­tion, we demon­strate prob­lem­at­ic points arising in this con­text from Ger­man stand­ards. I. Name of the food Ac­cord­ing to Art. 17 FIR, pre-pack­aged food­stuffs must be provided with the name of the food. The name should provide in­form­a­tion about the type of food and its spe­cial char­ac­ter­ist­ics. In Ger­many, the guidelines of the Ger­man Food Book (Deutsches Lebens­mit­tel­buch) are es­pe­cially rel­ev­ant when it comes to the nam­ing of food in ac­cord­ance with Art. 17 FIR. A non-gov­ern­ment­al com­mis­sion ad­op­ted these non-le­gis­lat­ive guidelines, which have no bind­ing ef­fect, but are fre­quently re­ferred to by au­thor­it­ies and courts when it comes to the ques­tion of a food pro­duct's cor­rect and  non-mis­lead­ing name.Al­though neither the guidelines for meat nor the guidelines for ve­get­ari­an and ve­gan foods are likely ap­plic­able to Clean Meat (since this food does not come from a slaughtered an­im­al or any part of an an­im­al), some con­clu­sions can be drawn from the reg­u­la­tions. Ac­cord­ing to the guidelines for ve­get­ari­an and ve­gan food, meat-typ­ic­al terms such as "fil­let" and "steak" are not ac­cept­able for non-meat products (i.e. products that do not come from slaughtered an­im­als). The cur­rent guidelines seem to re­flect that ve­get­ari­an products pre­vi­ously had no meat-typ­ic­al char­ac­ter­ist­ics. This policy, how­ever, may not be sus­tain­able in this form in light of new tech­nic­al de­vel­op­ments.Con­sequently, it will be a chal­lenge to la­bel Clean Meat products with risk-free names, but still ac­cur­ately de­scribe each product. Each in­di­vidu­al case must be ex­amined and it must be de­term­ined wheth­er names like "Bur­ger", "Schnitzel" and "Steak" can be ap­plied to Clean Meats. II. Ad­vert­ising In the con­text of ad­vert­ising, it is par­tic­u­larly im­port­ant to pre­vent con­sumers from be­ing misled about the pro­duc­tion meth­od of the re­spect­ive meat product (i.e. tra­di­tion­al or in-vitro). For ex­ample, it could be prob­lem­at­ic if the pack­aging of a Clean Meat product shows an­im­als in a green land­scape.  Con­sumer know­ledge about nu­tri­tion­al val­ues and the health ad­vant­ages (or dis­ad­vant­ages) of Clean Meat vis-à-vis con­ven­tion­al meat will be lim­ited when mar­ket­ing be­gins. Hence, pre­cise in­form­a­tion will need to be com­mu­nic­ated. III. Oth­er la­belling is­sues Fi­nally, it should be noted that there are spe­cial la­belling ob­lig­a­tions for ge­net­ic­ally mod­i­fied food. For ex­ample, la­bels must ex­pli­citly state that the product or parts of it have been ge­net­ic­ally mod­i­fied. E. Con­clu­sion It can­not be denied that the mar­ket­ing of Clean Meat faces po­ten­tial high leg­al hurdles. Be­sides the chal­lenges for ap­provals, is­sues re­lated to la­belling and ad­vert­ising also per­sist. However, if these chal­lenges are un­der­stood and a pro­duct's entry in­to the mar­ket is care­fully pre­pared, these hurdles can be over­come in an eco­nom­ic­ally reas­on­able way.
14 April 2021
Di­git­al Ser­vices Act (DSA): A new leg­al frame­work for the plat­form eco­nomy
The European Com­mis­sion has is­sued the draft pro­pos­al for the Reg­u­la­tion on a Single Mar­ket for Di­git­al Ser­vices (Di­git­al Ser­vices Act, the “DSA”), which cre­ates a new leg­al frame­work for di­git­al ser­vices, amends the e-Com­merce Dir­ect­ive, and pre­pares the EU law for new and in­nov­at­ive in­form­a­tion so­ci­ety di­git­al ser­vices.The DSA sets out uni­form, har­mon­ised rules for in­ter­me­di­ary ser­vice pro­viders (the “ISPs”) to foster in­nov­a­tion, growth and com­pet­it­ive­ness, to bet­ter pro­tect con­sumers and their fun­da­ment­al rights on­line, to en­sure a safe, pre­dict­able and trus­ted on­line en­vir­on­ment, to of­fer more choices for users and less ex­pos­ure to il­leg­al con­tent, to provide ac­cess to busi­ness users to EU-wide mar­kets through plat­forms, and to fa­cil­it­ate the scal­ing up of smal­ler plat­forms, SMEs and start-ups. The new draft rules es­tab­lish:a frame­work for the con­di­tion­al ex­emp­tion from li­ab­il­ity of ISPs;rules on spe­cif­ic due di­li­gence and oth­er ob­lig­a­tions tailored to dif­fer­ent cat­egor­ies of ISPs;law en­force­ment rules and a new re­gime for co­oper­a­tion of and co­ordin­a­tion between the com­pet­ent au­thor­it­ies. 1. Which di­git­al ser­vice pro­viders are covered? The DSA cov­ers those ISPs, wheth­er es­tab­lished in or out­side the EU, that provide in­ter­me­di­ary ser­vices such as con­duit ser­vices, cach­ing ser­vices, host­ing ser­vices to re­cip­i­ents (users, busi­ness users, con­sumers, in­di­vidu­als and leg­al en­tit­ies us­ing the in­ter­me­di­ary ser­vices) hav­ing an es­tab­lish­ment or res­id­ence in the EU.The defin­i­tions of con­duit, cach­ing and host­ing ser­vice pro­viders re­mained the same as in the e-Com­merce Dir­ect­ive; the DSA only re­peats those e-Com­merce Dir­ect­ive defin­i­tions word-for-word.The draft reg­u­la­tion con­tains spe­cial ob­lig­a­tions for on­line plat­form host­ing pro­viders and very large plat­forms as a spe­cial cat­egory of on­line plat­forms, and defines those host­ing ser­vices as fol­lows:On­line plat­forms are pro­viders of host­ing ser­vices which store and make avail­able in­form­a­tion to the pub­lic at the re­quest of a re­cip­i­ent of the ser­vice, e.g. on­line mar­ket­places, app stores, col­lab­or­at­ive eco­nomy plat­forms and so­cial me­dia plat­forms. However, if stor­ing or mak­ing in­form­a­tion avail­able to the pub­lic is a minor and an­cil­lary fea­ture of an­oth­er ser­vice, and can­not be used without that oth­er ser­vice for ob­ject­ive and tech­nic­al reas­ons, the ser­vice does not qual­i­fy as an on­line plat­form. This is the situ­ation with the com­ment sec­tion in an on­line news­pa­per or email and private mes­saging ser­vices.Very large on­line plat­forms are on­line plat­forms which provide their ser­vices to a num­ber of av­er­age monthly act­ive re­cip­i­ents of the ser­vice in the EU equal to or high­er than 45 mil­lion. The list of very large on­line plat­forms is pub­lished in the Of­fi­cial Journ­al of the EU. 2. No change in the li­ab­il­ity of ISPs for in­form­a­tion stored or trans­mit­ted in their ser­vices The DSA does not change the li­ab­il­ity re­gime of ISPs for il­leg­al con­tent. It only re­peats the li­ab­il­ity pro­vi­sions of the e-Com­merce Dir­ect­ive word-for-word and also main­tains the e-com­merce rule that ISPs do not have a gen­er­al ob­lig­a­tion to mon­it­or the in­form­a­tion they trans­mit or store, or to act­ively seek facts or cir­cum­stances in­dic­at­ing il­leg­al activ­ity.As an ad­di­tion, the draft reg­u­la­tion stip­u­lates that ISPs can still refer to the ex­emp­tion of li­ab­il­ity even if they con­duct vol­un­tary self-ini­ti­ated in­vest­ig­a­tions or oth­er activ­it­ies aimed at de­tect­ing, identi­fy­ing and re­mov­ing, or dis­abling ac­cess to, il­leg­al con­tent, or take the ne­ces­sary meas­ures to com­ply with the re­quire­ments of EU law. 3. What are the new ob­lig­a­tions? The DSA stip­u­lates new ob­lig­a­tions on ISPs at dif­fer­ent levels. Com­mon ob­lig­a­tions ap­ply to all kind of ISPs, in­clud­ing on­line plat­forms and very large on­line plat­forms. Host­ing pro­viders have ad­di­tion­al ob­lig­a­tions, and the DSA con­tains spe­cial ob­lig­a­tions for on­line plat­forms com­pared to oth­er host­ing ser­vices. In ad­di­tion, very large on­line plat­forms have fur­ther ob­lig­a­tions to man­age sys­tem­ic risks. 3.1 Com­mon ob­lig­a­tions ap­plic­able to all ISPs Provid­ing in­form­a­tion to au­thor­it­ies based on or­ders: if an ISP re­ceives an or­der from an au­thor­ity to act against il­leg­al con­tent, the ISP must in­form the au­thor­ity without un­due delay about the ac­tions it takes and the time of those ac­tions. Fur­ther­more, if the ISP re­ceives an or­der to provide in­form­a­tion about a spe­cif­ic in­di­vidu­al re­cip­i­ent of a ser­vice, the ISP must con­firm the re­ceipt of the or­der to the au­thor­ity without un­due delay and must provide the re­ques­ted in­form­a­tion with cer­tain lim­it­a­tions.Des­ig­nat­ing points of con­tact and leg­al rep­res­ent­at­ives: ISPs must es­tab­lish a single point of con­tact for dir­ect elec­tron­ic com­mu­nic­a­tion with the au­thor­it­ies and pub­lish it. Fur­ther­more, ISPs not es­tab­lished in the EU but of­fer­ing ser­vices in the EU must des­ig­nate in writ­ing a leg­al rep­res­ent­at­ive (to­geth­er with its name and con­tact de­tails) in one of the EU coun­tries where the ISP of­fers ser­vices for re­ceipt, ex­e­cu­tion and en­force­ment of au­thor­ity de­cisions and for co­oper­a­tion with the au­thor­it­ies. This des­ig­nated leg­al rep­res­ent­at­ive can be held li­able for non-com­pli­ance with ob­lig­a­tions un­der the DSA.In­dic­at­ing re­stric­tions in terms: all re­stric­tions (in­clud­ing con­tent mod­er­a­tion, al­gorithmic de­cision-mak­ing, and hu­man re­view rules) re­lated to the use of ISPs’ ser­vices re­gard­ing in­form­a­tion provided by the re­cip­i­ents must be in­cluded in the terms and con­di­tions of the ser­vices.Pub­lish­ing an­nu­al trans­par­ency re­ports: ISPs must pub­lish de­tailed an­nu­al re­ports of any con­tent mod­er­a­tion they en­gaged in dur­ing the rel­ev­ant peri­od. These re­ports must in­clude, among oth­ers, cer­tain in­form­a­tion on the or­ders from au­thor­it­ies, no­tices on il­leg­al con­tent and com­plaints re­ceived by the ISP, as well as on con­tent mod­er­a­tion by the ISP. 3.2 Ad­di­tion­al ob­lig­a­tions on all host­ing pro­viders Man­aging no­tices on il­leg­al con­tents: the host­ing pro­vider must in­tro­duce eas­ily ac­cess­ible, user-friendly elec­tron­ic pro­cesses for man­aging no­tices on il­leg­al con­tents. The DSA lists the man­dat­ory ele­ments of such a no­tice. The host­ing pro­vider must con­firm the re­ceipt of such no­tice in a re­spond­ing email and no­ti­fy the claimant of its de­cision without un­due delay.Provid­ing reas­on­ing for de­cisions: if the host­ing pro­vider de­cides to re­move or make un­avail­able any il­leg­al con­tent provided by the re­cip­i­ent, it must in­form the re­cip­i­ent of the de­cision and give clear reas­on­ing for that de­cision. This reas­on­ing must con­tain all man­dat­ory ele­ments lis­ted in the DSA. The de­cision must be pub­lished in an an­onymised way in the Com­mis­sion’s pub­lic data­base. 3.4 Spe­cial ob­lig­a­tions of on­line plat­forms The pro­vi­sions ap­plic­able to on­line plat­forms can­not be ap­plied to SME on­line plat­forms. The fol­low­ing ad­di­tion­al ob­lig­a­tions ap­ply to on­line plat­forms, in­clud­ing very large on­line plat­forms:Com­plaint man­age­ment sys­tem: on­line plat­forms must main­tain an in­tern­al, user-friendly, eas­ily ac­cess­ible elec­tron­ic com­plaint man­age­ment sys­tem and must grant ac­cess to it to the re­cip­i­ents. The re­cip­i­ents can sub­mit com­plaints elec­tron­ic­ally here against the on­line plat­form’s de­cisions on their il­leg­al con­tent.Out of court dis­pute set­tle­ment: re­cip­i­ents af­fected by an on­line plat­form’s de­cision on il­leg­al con­tent are en­titled to turn to an out-of-court body cer­ti­fied by the di­git­al ser­vice co­ordin­at­or. The on­line plat­forms are bound by the de­cision of this body. The DSA con­tains the de­tailed rules for the pro­ceed­ings and the de­cisions of this cer­ti­fied body.Pri­or­ity for trus­ted flag­gers: on­line plat­forms must pro­cess the no­tices on il­leg­al con­tent sub­mit­ted by trus­ted flag­gers with pri­or­ity. The di­git­al ser­vice co­ordin­at­ors are en­titled to qual­i­fy an en­tity as a trus­ted flag­ger if all con­di­tions lis­ted in the DSA are met. The list of trus­ted flag­gers is pub­lished in the Com­mis­sion’s pub­licly avail­able data­base.Meas­ures against ab­us­ive no­tices and counter-no­tices: on­line plat­forms must sus­pend their ser­vices to re­cip­i­ents that fre­quently provide mani­festly il­leg­al con­tent. Fur­ther­more, on­line plat­forms must also sus­pend the pro­cessing of no­tices and com­plaints sub­mit­ted by per­sons that fre­quently sub­mit no­tices or com­plaints that are mani­festly un­foun­ded. The DSA con­tains de­tailed rules for the cir­cum­stances to be as­sessed in the case of such sus­pen­sion.Re­port­ing sus­pi­cions of crim­in­al of­fences: on­line plat­forms must promptly in­form the mem­ber states’ com­pet­ent law en­force­ment au­thor­it­ies, or in cer­tain cases Euro­pol, if they be­come aware of any sus­pi­cion of a crim­in­al of­fence in­volving a threat to the life or safety of per­sons has taken place, is tak­ing place or is likely to take place.Know Your Busi­ness Cus­tom­er: on­line plat­forms must identi­fy their traders pro­mot­ing mes­sages or of­fer­ing products or ser­vices to EU con­sumers, and must ob­tain in­form­a­tion about them lis­ted in the DSA, among oth­ers the name, con­tact de­tails, re­gis­tra­tion num­ber, copy of the ID card of the trader. More de­tailed trans­par­ency re­ports: on­line plat­forms must in­clude ad­di­tion­al in­form­a­tion in their an­nu­al trans­par­ency re­port, such as in­form­a­tion about out-of-court dis­putes, sus­pen­sions, and auto­mated con­tent mod­er­a­tion. Fur­ther­more, on­line plat­forms must pub­lish in­form­a­tion at least once every six months on the av­er­age monthly act­ive re­cip­i­ents of the ser­vice in each EU coun­try.User-fa­cing trans­par­ency of on­line ad­vert­ising: on­line plat­forms must en­sure that ad­vert­ise­ments dis­played in their ser­vices con­tain in­form­a­tion that this is an ad­vert­ise­ment, who is the ad­vert­iser, and the tar­get audi­ence of the ad­vert­ise­ments. 3.5 Very large on­line plat­forms’ spe­cial ob­lig­a­tions for man­aging sys­tem­ic risks The draft reg­u­la­tion con­tains the fol­low­ing spe­cial ob­lig­a­tions for very large on­line plat­forms for man­aging sys­tem­ic risks:Risk man­age­ment ob­lig­a­tions: very large on­line plat­forms must con­duct an­nu­al risk as­sess­ments on the sig­ni­fic­ant sys­tem­ic risks stem­ming from the func­tion­ing and use of their ser­vices in the EU. Fur­ther­more, based on these risk as­sess­ments, they must put in place reas­on­able, pro­por­tion­ate and ef­fect­ive risk mit­ig­a­tion meas­ures for the sys­tem­ic risks they identi­fy. The DSA con­tains a de­tailed list of those risk-mit­ig­a­tion meas­ures.Ex­tern­al risk audit­ing and pub­lic ac­count­ab­il­ity: very large on­line plat­forms must con­duct an­nu­al audits on com­pli­ance with the DSA and the code of con­duct via an in­de­pend­ent, ex­tern­al pro­fes­sion­al aud­it­or. The aud­it­or must is­sue a writ­ten audit re­port in­clud­ing the man­dat­ory ele­ments lis­ted in the DSA in writ­ing.Trans­par­ency of re­com­mend­er sys­tems: if a very large on­line plat­form uses a re­com­mend­er sys­tem, it must in­clude the main para­met­ers of and cer­tain in­form­a­tion about this sys­tem in its terms and con­di­tions, and must en­sure op­tions for users not in­volving pro­fil­ing.More trans­par­ency in on­line ad­vert­ising: very large on­line plat­forms must make pub­licly avail­able, through APIs, an an­onymised re­pos­it­ory about the on­line ad­vert­ise­ments dis­played on the plat­form. The re­pos­it­ory must con­tain the con­tent of the ad­vert­ise­ments, each ad­vert­iser’s name, the peri­od when each ad­vert­ise­ment was dis­played, and cer­tain in­form­a­tion about the tar­get audi­ence of each ad­vert­ise­ment.Data shar­ing with au­thor­it­ies and re­search­ers: very large on­line plat­forms must provide ac­cess to the data to the di­git­al ser­vice co­ordin­at­or or the Com­mis­sion for mon­it­or­ing and as­sess­ing com­pli­ance with the DSA, and must grant ac­cess to the data to vet­ted aca­dem­ic, in­de­pend­ent re­search­ers for con­duct­ing re­search that con­trib­utes to the iden­ti­fic­a­tion and un­der­stand­ing of sys­tem­ic risks. Data ac­cess must be en­sured via APIs or on­line data­bases.Com­pli­ance of­ficer: very large on­line plat­forms must ap­point at least one pro­fes­sion­al com­pli­ance of­ficer to mon­it­or com­pli­ance with the DSA. The com­pli­ance of­ficer’s name and con­tact de­tails must be provided to the di­git­al ser­vice co­ordin­at­or and the Com­mis­sion.Ad­di­tion­al trans­par­ency re­port­ing du­ties: very large on­line plat­forms must pub­lish trans­par­ency re­ports every six months and must pub­lish and sub­mit ad­di­tion­al re­ports lis­ted in the DSA to the di­git­al ser­vice co­ordin­at­or and the Com­mis­sion. 4. Com­pet­ent au­thor­it­ies, for­um shop­ping All EU mem­ber states must des­ig­nate a com­pet­ent na­tion­al en­force­ment au­thor­ity for the DSA and the same or an­oth­er au­thor­ity as the di­git­al ser­vice co­ordin­at­or. Each di­git­al ser­vice co­ordin­at­or has the power of in­vest­ig­a­tion and is en­titled to de­mand in­form­a­tion from the ISPs and any oth­er per­son on sus­pec­ted in­fringe­ments of the DSA, to carry out on-site in­spec­tions, to ask staff of the ISPs to give ex­plan­a­tions, to or­der the ces­sa­tion of an in­fringe­ment, to im­pose fines, and to ad­opt in­ter­im meas­ures.The EU mem­ber state in which the main es­tab­lish­ment of the ISP is loc­ated will have jur­is­dic­tion over the ISP. If an ISP does not have an es­tab­lish­ment in the EU but of­fers ser­vices in the EU, it will be deemed to be un­der the jur­is­dic­tion of the EU mem­ber state where its leg­al rep­res­ent­at­ive resides or is es­tab­lished, which en­ables for­eign ISPs to choose the EU jur­is­dic­tion by des­ig­nat­ing its leg­al rep­res­ent­at­ive. If the ISP fails to ap­point a leg­al rep­res­ent­at­ive, all EU mem­ber states will have jur­is­dic­tion over that ISP.The DSA es­tab­lishes the European Board for Di­git­al Ser­vices, an in­de­pend­ent ad­vis­ory group of di­git­al ser­vice co­ordin­at­ors on the su­per­vi­sion of ISPs with ad­vis­ory tasks for di­git­al ser­vice co­ordin­at­ors and the Com­mis­sion.The DSA in­tro­duces en­hanced su­per­vi­sion for very large plat­forms. In this case, the di­git­al ser­vices co­ordin­at­or will con­sider all opin­ions and re­com­mend­a­tions of the European Board for Di­git­al Ser­vices and the Com­mis­sion. The Com­mis­sion and the Board is en­titled to re­com­mend that the di­git­al ser­vice co­ordin­at­or in­vest­ig­ates the in­fringing activ­ity. The Com­mis­sion is en­titled to ini­ti­ate its own pro­ceed­ings against a very large on­line plat­form in cases defined in the DSA. The DSA con­tains spe­cial rules for pro­ceed­ings ini­ti­ated by the Com­mis­sion against a very large plat­form, with spe­cial pro­ced­ur­al rights and ob­lig­a­tions. 5. Sanc­tions The DSA does not con­tain an ex­haust­ive list of sanc­tions for an in­fringe­ment of the reg­u­la­tion; the Mem­ber States will set out the rules on sanc­tions. The draft reg­u­la­tion defines the fol­low­ing max­im­um amount of pen­al­ties:6% of the an­nu­al in­come or turnover of the ISP for in­fringing the ob­lig­a­tions in the DSA;1% of the an­nu­al in­come or turnover of the ISP for sup­ply­ing in­cor­rect, in­com­plete or mis­lead­ing in­form­a­tion, fail­ing to reply or rec­ti­fy in­cor­rect, in­com­plete or mis­lead­ing in­form­a­tion, and fail­ing to sub­mit to an on-site in­spec­tion;5% of the av­er­age daily turnover in the pre­ced­ing fin­an­cial year per day, cal­cu­lated from the date ap­poin­ted by the de­cision in the case of daily, peri­od­ic pen­alty pay­ments. 6. Next steps The European Par­lia­ment and Mem­ber States will dis­cuss the Com­mis­sion’s pro­pos­al ac­cord­ing to the or­din­ary le­gis­lat­ive pro­ced­ure, which will take at least 18 months. Once ad­op­ted, the DSA will dir­ectly ap­ply across the EU and ISPs will have three months to pre­pare for the new leg­al re­gime.We will con­tinu­ously mon­it­or the status of the le­gis­lat­ive pro­cess and keep you up­dated on any changes to the draft text of the DSA.
01 April 2021
Di­git­al Mar­kets Act: a new and fair busi­ness frame­work for large plat­forms
The European Com­mis­sion has pub­lished the draft pro­pos­al for a new com­pet­i­tion law frame­work for large on­line plat­forms, called the Di­git­al Mar­kets Act (the “DMA”). The reas­on the Com­mis­sion pro­posed the DMA is that a small num­ber of large on­line plat­forms cap­ture the biggest share of over­all value gen­er­ated in Europe’s di­git­al eco­nomy, and these plat­forms have emerged by be­ne­fit­ting from sec­tor char­ac­ter­ist­ics such as strong net­work ef­fects, of­ten em­bed­ded in their own plat­form eco­sys­tems. These plat­forms rep­res­ent the key struc­tur­ing ele­ments in today’s di­git­al eco­nomy, in­ter­me­di­at­ing the ma­jor­ity of trans­ac­tions between end users and busi­ness users. A few large plat­forms in­creas­ingly act as gate­ways or gate­keep­ers between busi­ness users and end users, and en­joy a long-term, en­trenched po­s­i­tion, of­ten as a res­ult of the cre­ation of con­glom­er­ate eco­sys­tems around their core plat­form ser­vices, which re­in­forces ex­ist­ing entry bar­ri­ers.The DMA deals with those large on­line plat­forms act­ing as gate­keep­ers in di­git­al mar­kets. The DMA aims to en­sure that:these plat­forms be­have fairly on­line;in­nov­at­ors and tech­no­logy start-ups will have new op­por­tun­it­ies to com­pete and in­nov­ate in the on­line plat­form en­vir­on­ment without hav­ing to com­ply with un­fair terms and con­di­tions that lim­it their de­vel­op­ment;con­sumers will have more and bet­ter ser­vices to choose from, more op­por­tun­it­ies to switch their pro­vider if they so wish, dir­ect ac­cess to ser­vices, and fairer prices. Who are the gate­keep­ers? Gate­keep­ers are core plat­form ser­vices which meet the qual­it­at­ive and quant­it­at­ive cri­ter­ia set out in the DMA. Core plat­form ser­vices in­clude on­line in­ter­me­di­ation ser­vices, search en­gines, so­cial net­work­ing ser­vices, video-shar­ing plat­form ser­vices, num­ber-in­de­pend­ent in­ter­per­son­al com­mu­nic­a­tion ser­vices, op­er­at­ing sys­tems, cloud com­put­ing ser­vices, ad­vert­ising ser­vices in­clud­ing any ad­vert­ising net­works, ad­vert­ising ex­changes and any oth­er ad­vert­ising in­ter­me­di­ation ser­vices, provided by a pro­vider of any of the core plat­form ser­vices lis­ted above.A core plat­form ser­vice qual­i­fies as a gate­keep­er, if:it has a sig­ni­fic­ant im­pact on the in­tern­al mar­ket, which is pre­sumed if it achieves an an­nu­al EEA turnover equal to or above EUR 6.5 bil­lion in the three pre­ced­ing fin­an­cial years, or where the av­er­age mar­ket cap­it­al­isa­tion or the equi­val­ent fair mar­ket value of the un­der­tak­ing to which it be­longs amoun­ted to at least EUR 65 bil­lion in the pre­ced­ing fin­an­cial year, and it provides a core plat­form ser­vice in at least three Mem­ber States;it op­er­ates a core plat­form ser­vice which serves as an im­port­ant gate­way for busi­ness users to reach end users, which is pre­sumed if it has more than 45 mil­lion monthly act­ive end users es­tab­lished or loc­ated in the Uni­on and more than 10,000 yearly act­ive busi­ness users es­tab­lished in the EU in the pre­ced­ing fin­an­cial year;it en­joys a long-term, en­trenched po­s­i­tion in its op­er­a­tions or it is fore­see­able that it will en­joy such po­s­i­tion in the near fu­ture, which is pre­sumed if the thresholds in point b) were met in each of the three pre­ced­ing fin­an­cial years.   What are the gate­keep­ers’ main ob­lig­a­tions? Do’s and Don’ts     What kind of tools and powers do the Com­mis­sion and oth­er bod­ies have? The DMA grants powers and dif­fer­ent pro­ced­ur­al rights to the European Com­mis­sion and es­tab­lishes the Di­git­al Mar­kets Ad­vis­ory Com­mit­tee for is­su­ing opin­ions in is­sues re­lated to the DMA.The DMA gives the Com­mis­sion the fol­low­ing powers:to des­ig­nate core plat­form ser­vices that meet the DMA cri­ter­ia as gate­keep­ers;to re­view ad-hoc the status of gate­keep­ers on re­quest or on its own;to re­view at two-year in­ter­vals the status of gate­keep­ers;to spe­cify meas­ures to be taken by gate­keep­er to com­ply with the DMA;to sus­pend cer­tain gate­keep­er ob­lig­a­tions un­der the DMA at a gate­keep­er’s re­quest, if the gate­keep­er demon­strates that com­pli­ance with that spe­cif­ic ob­lig­a­tion would en­danger its eco­nom­ic vi­ab­il­ity;to ex­empt a gate­keep­er from cer­tain ob­lig­a­tions un­der the DMA on the grounds of pub­lic mor­al­ity, pub­lic health or pub­lic se­cur­ity;to ini­ti­ate mar­ket in­vest­ig­a­tions:lower-ro­manto ex­am­ine wheth­er a pro­vider of core plat­form ser­vices should be des­ig­nated as a gate­keep­er;in­to sys­tem­at­ic non-com­pli­ance by a gate­keep­er;to ex­am­ine wheth­er cer­tain ser­vices in the di­git­al sec­tor should be ad­ded to the list of core plat­form ser­vices and identi­fy prac­tices that might lim­it the con­test­abil­ity of core plat­form ser­vices or might be un­fair.The DMA grants in­vest­ig­at­ive, en­force­ment and mon­it­or­ing powers to the Com­mis­sion dur­ing its pro­ceed­ings, based on which the Com­mis­sion is en­titled to:re­quest in­form­a­tion from any un­der­tak­ings and from the gov­ern­ments and au­thor­it­ies of EU mem­ber states;ac­cess data bases and al­gorithms;in­ter­view any private per­son or leg­al en­tity to col­lect in­form­a­tion re­lat­ing to the sub­ject-mat­ter of an in­vest­ig­a­tion;con­duct on-site in­spec­tions at the premises of any un­der­tak­ings, in­clud­ing to­geth­er with aud­it­ors and ex­perts;or­der in­ter­im meas­ures against a gate­keep­er on the basis of a prima facie find­ing of an in­fringe­ment of ob­lig­a­tions un­der the DMA;mon­it­or the ef­fect­ive im­ple­ment­a­tion and com­pli­ance with the ob­lig­a­tions un­der the DMA.   What will the sanc­tions for non-com­pli­ance be? If the Com­mis­sion ad­opts a non-com­pli­ance de­cision in which it finds that a gate­keep­er does not com­ply with one or more ob­lig­a­tions un­der the DMA, the Com­mis­sion may fine a gate­keep­er.The max­im­um amount of a fine is 10% of the total world­wide an­nu­al turnover of the gate­keep­er in the case of a ma­ter­i­al breach of the ob­lig­a­tions un­der the DMA, and a max­im­um 1% in the case of a less ser­i­ous breach of ob­lig­a­tions un­der the DMA.The Com­mis­sion is also en­titled to or­der peri­od­ic pen­alty pay­ments of up to 5% of the av­er­age daily turnover in cer­tain cases defined in the DMA.In the case of sys­tem­at­ic breaches of the DMA ob­lig­a­tions by gate­keep­ers, ad­di­tion­al rem­ed­ies may be im­posed after a mar­ket in­vest­ig­a­tion. Such rem­ed­ies will need to be pro­por­tion­ate to the of­fence com­mit­ted. If ne­ces­sary and as a last re­sort, non-fin­an­cial rem­ed­ies can be im­posed. These can in­clude be­ha­vi­our­al and struc­tur­al rem­ed­ies, e.g. the di­vestit­ure of (parts of) a busi­ness.   What are the next steps? The European Par­lia­ment and Mem­ber States will dis­cuss the Com­mis­sion’s pro­pos­al ac­cord­ing to the or­din­ary le­gis­lat­ive pro­ced­ure, which will take at least 18 months. Once ad­op­ted, the Act will dir­ectly ap­ply across the EU and the core plat­form ser­vice pro­viders will have six months to pre­pare for the new leg­al re­gime.We will con­tinu­ously mon­it­or the status of the le­gis­lat­ive pro­cess and keep you up­dated on any changes to the draft text of the DMA.