The Weekly Vulcan View | Analysis of Latest EU Developments 15-19 July

Key Events This Week

Von der Leyen Secures Commission Presidency
On Tuesday MEPs narrowly ratified Ursula von der Leyen as the new President of the European Commission – making her the first woman to fill the EU’s top job. The former German Defence Minister won ratification by a margin of just 9 votes. Von der Leyen pledged to put forward a “green deal for Europe” in her first 100 days in office, including legislating for net zero emissions by 2050 and introducing an EU carbon border tax.

Among those who backed her candidacy were her own European People’s Party (EPP) group, as well as the vast majority of the 108 Renew Europe (Liberal) MEPs. With less than an hour before the secret ballot commenced, the socialist group announced support for her nomination, despite a personalised campaign mounted by German Socialists in the days before the vote, alleging gross incompetence in the performance of her role as federal Minister.

Following von der Leyen’s election, she told reporters that Brexit will be the start of a new relationship between the UK and EU. She said she was willing to delay the Brexit deadline beyond October 31st should there be “good reasons.” Brexit Party MEP Nigel Farage – who had clashed with the Commission President-elect earlier in the day – said that von der Leyen has “power but no legitimacy” and that she was pushing for a “centralised, undemocratic, updated form of communism” in the EU. The irony was lost on Farage as von der Leyen secured a similar percentage vote in her election to that of the Brexit referendum result.

Von de Leyen’s election will put her at the forefront of negotiations with the U.S. over trade and other major issues. In the past, von der Leyen has called President Trump’s discussions of NATO “immature” and suggested that the US President is uncomfortable with strong female leaders.

The current President of the European Commission, Jean Claude Juncker will remain in office until the end of October.

May prepares to bow out as successor poised for keys to No. 10
British Prime Minister Theresa May this week gave the last major speech of her premiership as she prepares to depart 10 Downing Street. In her final address May took a swipe at what she referred to as a growing trend in the politics of “absolutism – one which believes that if you simply assert your view loud enough and long enough you will get your way in the end.” Reiterating her regret over the failure to ratify the Withdrawal Agreement, she warned her successor that delivering Brexit means that compromise would be required. Many within her own party gave the PM similar advice prior to her setting out her red lines in the Lancaster House speech of January 2017 – advice she clearly ignored.

Theresa May will take part in her final Prime Minister’s Questions on Wednesday after which she is expected to travel to Buckingham Palace to formally resign as Prime Minister.

Boris Johnson and Jeremy Hunt took part in their final hustings of the leadership campaign this week with both candidates declaring that the backstop arrangement, which is central to the Withdrawal Agreement, was effectively dead. It is widely expected that Boris Johnson will emerge as the victor when the result is announced on Tuesday. His pompous approach to Brexit is likely to set up a dramatic showdown not just with the House of Commons but also his fellow EU leaders including the new President of the European Commission.

Meanwhile the Office for Budget Responsibility, the UK government’s fiscal watchdog, on Thursday warned that a no deal Brexit could result in a £30 billion black hole in the public finances. In its first published work addressing the potential for a no-deal outcome, the watchdog forecasted a 2% contraction in the British economy in 2020.

European Commission launch investigation into Amazon
The European Commission announced that it has opened a formal investigation into Amazon over whether the tech giant is using sales data to gain an unfair advantage over smaller sellers on the Marketplace platform. Commissioner for Competition Policy, Margrethe Vestager noted that, through online shopping is increasing, “E-commerce has boosted retail competition and brought more choice and better prices” and therefore she’s taking a “very close look at Amazon’s business practices…”

The EU will examine the agreements between the U.S. company and its sellers, which allows Amazon’s retail business to analyse and use third-party seller data. It will also look into the role of data in the selection of the “Buy Box” on Amazon’s search results, underlining regulators’ increasing focus on how tech companies exploit customer information. Should it be proven that Amazon did indeed breach EU competition rules, they could be fined up to 10% of its annual revenue. Amazon said it would cooperate fully with the EU.

Amazon has been the subject of previous EU investigations when it was ordered to pay $295 million back in taxes to Luxembourg after that the company profited from a tax avoidance deal. The US House Judiciary Committee has been investigating the market power of Facebook, Google, Amazon and Apple and how they use data to boost their market power.

In a parallel case, Germany’s antitrust authority had been investigating the company for seven months until it reached a deal on Wednesday July 17 to overhaul its Business Solutions Agreement to third-party sellers. Other EU countries including Austria, Italy and Luxembourg are also independently investigating Amazon’s business practices.

DATES AHEAD

Monday 22 July – Thursday 25 July European Parliament Committee Meetings (Brussels)
Wednesday 24 July – Economic and Financial Affairs Council (Brussels)

Compliments of Vulcan Consulting, a member of the EACCNY