In a bid to halt the encroachment of Chinese companies into European markets, the EU is seeking to restrict foreign direct investment (FDI) by implementing a rigorous screening framework designed to identify any substantive threats to the bloc’s critical infrastructure or technologies, with transport one of the most acute ones. The information-exchange system would alert governments to proposed foreign investments in a member country and would offer a mechanism for examining how they might affect an existing European project.
As the EU is exceptionally vulnerable to Chinese encroachments, the nervousness over FDI is justified. It’s a troubling matter of fact that that Europe is lagging behind Beijing in a number of industries, particularly when it comes to transportation. Ironically, it’s a situation exacerbated by the rigid application of EU competition regulations.
Allegations that the system is holding back important developments were first voiced by Angela Merkel and French finance minister Bruno Le Maire in the context of EU concerns over the Siemens-Alstom merger. The deal would create a European train “champion” to resist the Chinese incursion. However, Competition Commissioner Margrethe Vestager will likely derail it over fears that the merger is ‘incompatible’ with the internal market. While the new entity would certainly have the clout to challenge the world’s largest train maker – Beijing-backed CRRC – EU officials believe that the Chinese threat is exaggerated and competition in the sector unlikely in the immediate future.
Considering Brussels’ fears over encroaching Chinese FDI, such attitudes regarding the transport sector are nothing short of absurd. Vesteger’s comment that “The champions we need are the ones that can fight their way to the top of a competitive market in Europe – and go on to do the same across the world” perfectly encapsulates this tragic irony. After all, Vesteger’s demand for globally competitive firms is directly undermined by the EU’s unwillingness to allow large competitive firms to arise in the first place.
It’s easy to dismiss the merger as a Franco-German scheme to dominate the EU’s railway sector. But Merkel and Le Maire have a point: China is ready, willing and able to plug the technology and infrastructure hole that Brussels has been unable to fill.
Because it is integral to Beijing’s Belt and Road Initiative, CRRC enjoys long-term strategic and operational support from its government. That backing has enabled it to capture 46 percent of the global railway market for trains, services and signalling. According to 2016 figures, CRRC is twice the size of its nearest competitor, Canadian group Bombardier, with Alstom and Siemens ranked third and fourth. The company would like exports to account for a fifth of its business by 2021 and has Europe firmly in its sights.
The argument in favour of scaling up the EU response should therefore be gaining ground. For China has upped its game in the quest for greater international engagement: a country that traditionally relied on technology transfer is now operating from a deep indigenous knowledge base and is transitioning from importer to exporter.
Unfortunately, the European industrial base essential for pushing back against China isn’t performing at its peak. The fragmentation of the transport sector across the EU means that few companies have the ability to manage long-term projects efficiently.
French aerospace and transport specialist Thales is a case in point. Although Thales has been unsuccessfully attempting to sell its ticketing division since 2016, the firm was contracted to provide Bordeaux with a contactless ticketing service. Company officials recently admitted the project twenty months behind schedule. Originally due for implementation in summer 2017, it has been dogged by setbacks and is now estimated to launch in March 2019. The delays have notably angered the city’s mayor and former French prime minister Alain Juppé, who called Thales’s inability to meet its commitments “unacceptable behaviour”.
The criticism is the more scathing considering that this regional debacle doesn’t bode well for the company’s $265m transportation contract in Vietnam’s capital city, awarded in 2017. Planned to be operational by 2021, the terms require Thales to deliver a telecommunications system for Hanoi’s metro Line 3. However, progress is already behind schedule due to delays in “dealing and conducting bidding packages”, as well as other issues.
Unfortunately, Thales isn’t the only such case. Spanish conglomerate Acciona has already demonstrated its inability to adhere to contractual terms in international projects. In charge of Sydney’s light rail project, repeated delays and cost overruns have caused lots of farcical discord between company representatives and local government officials over failing to disclose information crucial to the project’s success.
The disputes have turned into political crisis for the Sydney government marked by official inquiries into Acciona’s conduct and Acciona suing in response, alleging govenrment misconduct in handling the project – all the while the firm itself is under pressure for seemingly failing to provide sufficient oversight on the ground.
If big players like Thales and Acciona have such difficulties getting their projects off the ground, their ability to successfully complete future demanding international contracts is reasonably called into question – which in turn highlights the lack of global credibility of European infrastructure and tech providers.
It’s no wonder then that the EU’s common transport policy is only making stuttering advances. It prioritises issues pertaining de-carbonization rather than pressing infrastructure and industrial base improvements. By trying to satisfy the parameters of an ever-shifting sustainability model, the transport sector hasn’t had the resources to bolster a skill base fit for the future.
The lesson for the EU is simple: widespread advances pivotal for the future of the bloc’s transport sector can only be realised if a big player is allowed to scale up and develop pioneering technology and greater efficiencies, thereby remaining competitive in the face of growing Chinese pressures. Besides strengthening FDI controls, Brussels urgently needs to adapt its industrial policy to help home-grown companies stay relevant in a rapidly changing international market. If Europe’s competition rules don’t allow European champions to emerge, it’s clearly time to take for a rethink.
Commission approves €800 million Italian scheme to compensate airports and ground-handling operators for the damage suffered due to the coronavirus outbreak
The European Commission has approved, under EU state aid rules, an €800 million Italian scheme to compensate airports and ground-handling operators for the damage suffered due to the coronavirus outbreak and the travel restrictions that Italy and other countries had to implement to limit the spread of the virus.
Executive Vice President Margrethe Vestager in charge of competition policy said: "Airports are among the companies that have been hit particularly hard by the coronavirus outbreak. This €800 million scheme will enable Italy to compensate them for the damage suffered as a direct result of the travel restrictions that Italy and other countries had to implement to limit the spread of the virus. We continue working in close cooperation with member states to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules.”
The Italian scheme
Italy notified to the Commission an aid measure to compensate airports and ground-handling operators for the damage suffered during the period between 1 March and 14 July 2020 due to the coronavirus outbreak and the travel restrictions in place.
Under the scheme, the aid will take the form of direct grants. The measure will be open to all airports and ground-handling operators with a valid operating certificate delivered by the Italian civil aviation authority.
A claw-back mechanism will ensure that any public support received by the beneficiaries in excess to the actual damage suffered will have to be paid back to the Italian State.
The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures granted by member states to compensate specific companies or specific sectors for the damages directly caused by exceptional occurrences, such as the coronavirus outbreak.
The Commission considers that the coronavirus outbreak qualifies as an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by the member states to compensate for the damages linked to the outbreak are justified.
The Commission found that the Italian measure will compensate damages that are directly linked to the coronavirus outbreak, and that it is proportionate, as the compensation will not exceed what is necessary to make good the damage, in line with Article 107(2)(b) TFEU.
On this basis, the Commission approved the measure under EU state aid rules.
Financial support from EU or national funds granted to health services or other public services to tackle the coronavirus situation falls outside the scope of State aid control. The same applies to any public financial support given directly to citizens. Similarly, public support measures that are available to all companies such as for example wage subsidies and suspension of payments of corporate and value added taxes or social contributions do not fall under State aid control and do not require the Commission's approval under EU State aid rules. In all these cases, member states can act immediately.
When State aid rules are applicable, member states can design ample aid measures to support specific companies or sectors suffering from the consequences of the coronavirus outbreak in line with the existing EU State aid framework.
On 13 March 2020, the Commission adopted a Communication on a co-ordinated economic response to the COVID-19 outbreak setting out these possibilities.
In this respect, for example:
- Member states can compensate specific companies or specific sectors (in the form of schemes) for the damage suffered due and directly caused by exceptional occurrences, such as those caused by the coronavirus outbreak. This is foreseen by Article 107(2)(b)TFEU.
- State aid rules based on Article 107(3)(c) TFEU enable member states to help companies cope with liquidity shortages and needing urgent rescue aid.
- This can be complemented by a variety of additional measures, such as under the de minimis Regulation and the General Block Exemption Regulation, which can also be put in place by Member States immediately, without involvement of the Commission.
In case of particularly severe economic situations, such as the one currently faced by all member states due the coronavirus outbreak, EU State aid rules allow member states to grant support to remedy a serious disturbance to their economy. This is foreseen by Article 107(3)(b) TFEU of the Treaty on the Functioning of the European Union.
On 19 March 2020, the Commission adopted a State Aid Temporary Framework based on Article 107(3)(b) TFEU to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework, as amended on 3 April, 8 May, 29 June, 13 October 2020 and 28 January 2021, provides for the following types of aid, which can be granted by member states: (i) Direct grants, equity injections, selective tax advantages and advance payments; (ii) State guarantees for loans taken by companies; (iii) Subsidised public loans to companies, including subordinated loans; (iv) Safeguards for banks that channel State aid to the real economy; (v) Public short-term export credit insurance;(vi) Support for coronavirus related research and development (R&D); (vii) Support for the construction and upscaling of testing facilities; (viii) Support for the production of products relevant to tackle the coronavirus outbreak; (ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions; (x) Targeted support in the form of wage subsidies for employees; (xi) Targeted support in the form of equity and/or hybrid capital instruments; (xii) Support for uncovered fixed costs for companies facing a decline in turnover in the context of the coronavirus outbreak.
The Temporary Framework will be in place until the end of December 2021. With a view to ensuring legal certainty, the Commission will assess before this date if it needs to be extended.
The non-confidential version of the decision will be made available under the case number SA.63074 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.
More information on the Temporary Framework and other action the Commission has taken to address the economic impact of the coronavirus pandemic can be found here.
Commission calls on member states to comply with EU rules on copyright in the Digital Single Market
The Commission has requested Austria, Belgium, Bulgaria, Cyprus, Czechia, Denmark, Estonia, Greece, Spain, Finland, France, Croatia, Ireland, Italy, Lithuania, Luxembourg, Latvia, Poland, Portugal, Romania, Sweden, Slovenia and Slovakiato communicate information about how the rules included in the Directive on Copyright in the Digital Single Market (Directive 2019/790/EU) are being enacted into their national law. The European Commission has also requested Austria, Belgium, Bulgaria, Cyprus, Czechia, Estonia, Greece, Spain, Finland, France, Croatia, Ireland, Italy, Lithuania, Luxembourg, Latvia, Poland, Portugal, Romania, Slovenia and Slovakiato communicate information about how Directive 2019/789/EU on online television and radio programmes is enacted into their national law.
As the member states above have not communicated national transposition measures or have done it only partially, the Commission decided today to open infringement procedures by sending letters of formal notice. The two Directives aim to modernise EU copyright rules and to enable consumers and creators to make the most of the digital world. They reinforce the position of creative industries, allow for more digital uses in core areas of society, and facilitate the distribution of radio and television programmes across the EU. The deadline for transposing these Directives into national legislation was 7 June 2021. These member states now have two months to respond to the letters and take the necessary measures. In the absence of a satisfactory response, the Commission may decide to issue reasoned opinions.
Winners of Europe’s largest youth entrepreneurship festival unveiled
370,000 young entrepreneurs from 40 countries competed to become Europe’s Company and Start Up of the Year on United Nations World Skills Day 2021.
Swim.me and Scribo have been named the winners of the JA Europe Enterprise Challenge and Company of the Year Competition, after battling it out withEurope’s best young entrepreneurs today in Gen-E 2021, the largest entrepreneurship festival across Europe.
Organised by JA Europe and hosted this year by JA Lithuania, the Gen-E festival combines two annual awards, the Company of the Year Competition (CoYC) and the European Enterprise Challenge (EEC).
Following presentations from 180 companies led by some of the brightest young entrepreneurial minds in Europe, the winners were announced at a virtual ceremony.
The winners of the European Enterprise Challenge, for university age entrepreneurs were as follows:
- 1st - Swim.me (Greece) who created a smart wearable device that preserves the orientation of blind swimmers in the pool. The system consists of an eco-friendly swimming cap and goggles and is intended for use in training conditions.
- 2nd - Mute (Portugal), a sound absorption module, able to eliminate echo/reverb and unwanted frequencies in a room by using fabric residues. Relies as a professional, sustainable and innovative solution, that promotes a circular economy.
- 3rd - Hjárni (Norway), whose goal is to become the world's most preferred supplier of eco-friendly tanning agents for sustainable leather production. While Europe's leather generates an annual value chain turnover of 125 billion euros, 85% of this leather is made using chrome, which is dangerous for both our health and environment.
The winners of the Company of the Year Competition were as follows:
- 1st – Scribo (Slovakia), a solution to dry-erase markers that are not being recycled and produce a waste of 35 billion plastic markers every year. They have developed zero-waste dry-erase whiteboard markers made of recycled wax.
- 2nd – FlowOn (Greece), an innovative adapter which converts outdoor taps into “smart taps” regulating the flow of water, reducing water consumption by up to 80% and reducing exposure to viruses and germs by more than 98%.
- 3rd – Lazy Bowl (Austria), are an all-female company specializing in freeze-dried fruit ‘smoothiebowls’ which are free from both colorings and preservatives.
For the first time ever, the Gen-E Festival saw the announcement of a “JA Europe Teacher of the Year Award. The award seeks to acknowledge role of teachers to inspire and motivate young people, to help them discover their potential and lead them to believe in their power of acting and changing the future.
Sedipeh Wägner, a teacher from Sweden, won the prize. Ms Wägner is an experienced JA teacher who teaches at the Introduction Program, dedicated to migrants and vulnerable students to prepare for the national programme, teach them Swedish and possibly complement their previous education to meet the Swedish high school levels and standards.
JA Europe, which organized the festival, is Europe‘s largest non-profit in Europe dedicated to creating pathways for employability, job creation and financial success. Its network operates across 40 countries and last year, its programmes reached almost 4 million young people with the support of over 100,000 business volunteers and 140,000 teachers and educators.
JA Europe CEO Salvatore Nigro said: “We are delighted to announce this year’s winners of the JA Company of the Year Competition and Enterprise Challenge. Each year over 370,000 students across Europe battle it out by designing their own mini companies and start-ups to compete at Gen-E, Europe’s largest entrepreneurship festival.
"Our intention is always to help boost career ambitions and improve employability, entrepreneurial skills and attitudes. Young entrepreneurs have so much to offer our society, and every year we see a new wave of enthusiasm towards solving societal problems with their own entrepreneurship. It’s reflected in the winners again this year, that young entrepreneurs not only see business as a means to a financial end, but as a platform by which to improve society and help people around them.”
JA Europe is the largest non-profit in Europe dedicated to preparing young people for employment and entrepreneurship. JA Europe is a member of JA Worldwide® which for 100 years has delivered hands on, experiential learning in entrepreneurship, work readiness and financial literacy.
JA creates pathways for employability, job creation and financial success. Last school year, the JA network in Europe reached almost 4 million young people across 40 countries with the support of nearly 100,000 business volunteers and over 140,000 teachers/educators.
What are the COYC and JA Company Programme? The JA Europe Company of the Year Competition is the annual European competition of the best JA Company Programme teams. The JA Company Programme empowers high school students (aged 15 to 19) to fill a need or solve a problem in their community and teaches them practical skills required to conceptualise, capitalise, and manage their own business venture. Throughout building their own company, students collaborate, make crucial business decisions, communicate with multiple stakeholders, and develop entrepreneurial knowledge and skills. Every year, more than 350,000 students across Europe take part in this programme, creating more 30,000 mini-companies.
What are the EEC and JA Start Up Programme? The European Enterprise Challenge is the annual European competition of the best JA Start Up Programme teams. The Start Up Programme allows post-secondary students (aged 19 to 30) to experience running their own company, showing them how to use their talents to set up their own business. Students also develop attitudes and skills necessary for personal success and employability and gain essential understanding in self-employment, business creation, risk-taking and coping with adversity, all with experienced business volunteers. Every year, more than 17,000 students from 20 countries across Europe are taking part in this programme, creating 2,500+ start-ups per year.
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