BDI/BDA BRUSSELS UPDATETHE GERMAN BUSINESS REPRESENTATION

June 2015

The EU CompetitivenessCouncil

The EU Competitiveness Council metfrom 28 to 29 May. The items on theagenda included product safety, theSUP-directive and the digitalisation ofindustry.

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Better Regulation

Comprehensive packageon better regulation

On 19 May the European Commissionpresented its agenda for better regulati-on. The package consists of several in-itiatives.

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Trade Policy

Process of TTIP resolutionin EP is delayed

The vote in the plenary session onTTIP – originally scheduled for 10 June – was deferred at short notice.

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European Policy

»Brexit leads to a deadend«

At the beginning of June, BDI DirectorGeneral Markus Kerber held talks in Lon-don, amongst others with the BDI’s Bri-tish partner association CBI.

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SUP-directive

Council decides on generalpolicy approach

On 28 May 2015 the CompetitivenessCouncil approved a general approach onSUP-directive.

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Further issues

EU Pension Funds Directive>> page 6EU Pension Funds Directive>> page 6

BDI/BDA Brussels Update June 2015 02

The EU Competitiveness CouncilThe EU Competitiveness Council

The EU Competitiveness Council met from 28 to 29 May. Theitems on the agenda included product safety, the SUP-directiveand the digitalisation of industry. Germany was represented byGerd Billen, state secretary in the Federal Ministry of Justiceand Consumer Protection.

A particularly controversial issue was the introduction of themandatory labelling of origin (Made in) within the framework ofthe planned product safety regulation. On the table was a tech-nical study by the EU Commission investigating the impact of aMade-in rule on six product groups. The discussions in theCouncil provided confirmation that a majority of 15 memberstates from Northern and Central Eastern Europe is strongly op-posed to compulsory labelling of origin, even if it were to be re-stricted to only a few sectors. It remains to be seen how theCommission will now proceed. The BDI continues to reject man-datory labelling of origin. It would lead to a serious increase inthe bureaucratic burdens on business enterprises and to theloss of the proven German quality label »Made in Germany«defined by quality features.

In a surprise move, the Council decided on a general approachon the directive on single-member private limited liability com-panies, the so-called SUP-directive. This breakthrough wasachieved after Hungary switched sides to join the camp of theSUP supporters. Since the directive does not provide for a se-paration of the company’s seat to be prohibited, Germany votedagainst, as was consistent with a vote by the Bundestag, theGerman Parliament. It is an open question what position will beadopted by the European Parliament on the proposed directive.A draft report in the legal committee is scheduled for mid-Sep-tember at the earliest. In the view of German industry it is an im-portant signal for the European single market that a majority ofEU member states should grant priority to freedom of establish-ment.

Finally, the Council sent out a key signal for the digitalisation ofindustry in Europe. The Council’s conclusions are right to stressthe need for increased European and global cooperation instandardisation in the IT area. Here the EU economics ministersprovided important input for the European Council from25 to 26 June, which is expected to provide orientations for thedigital single market. In addition, with the aim of strengtheningEuropean cooperation Commissioner Oettinger announced thatthe various national initiatives on industry 4.0 will be tabled to-gether at the end of June 2015.

Contact:Joscha Ritz (BDI), j.ritz@bdi.eu

EU Commission submits comprehensive package on better regulation EU Commission submits comprehensive package on better regulation

On 19 May the European Commission presented its agenda forbetter regulation. The objective is to improve the quality of Euro-pean law-making and to achieve greater coherence by meansof comprehensive reforms throughout the entire policy cycleand by creating greater transparency in decision-makingprocesses.

The package consists of several initiatives. At its centre is theproposal for a new inter-institutional agreement on better regu-lation which is to be negotiated between the Council, the Parlia-ment and the Commission by the end of the year. This is inten-ded to commit the legislative institutions of the EU – the Counciland the Parliament – to compliance with and implementation ofmeasures for better regulation.

The key feature of the proposal is consequently the impositionof a binding commitment on both institutions to undertake im-pact assessments in the case of substantial changes to the

BDI/BDA Brussels Update June 2015 03

Commission’s proposal. An independent body is to be empowe-red to review the impact assessments undertaken by the Coun-cil and the Parliament. As yet the precise mode of operations ofthis body remains unclear.

Another main concern of the EU Commission is to create grea-ter transparency. In future, public consultations are to be carriedout with respect to the various steps of a policy initiative. This isintended to enable greater consideration to be given to the posi-tion of stakeholders. In the process the role and the autonomyof the social partners is to be preserved. It is also planned tohold consultations on the roadmaps of the Commission, as wellas inception impact assessments, at which the respective alter-native options for actions and for regulating a certain issue areto be considered. In addition, stakeholders are to be given theright to state their position on the legal proposal submitted bythe Commission within eight weeks after it has been adopted.Consultations will also be held on delegated and implementingacts.

Institutional changes are also proposed. The new authority forassessing the quality of draft impact assessment reports, theRegulatory Scrutiny Board, takes the place of the former ImpactAssessment Board. It is to be composed of three external ex-perts who will examine the impact assessments together withthree other members of the Commission staff and a chairman

from the commission on a full time basis. A new REFIT platformis also to be set up consisting of representatives of the memberstates and relevant stakeholders. It is intended to collect sugge-stions to reduce regulatory burdens and to submit concrete pro-posals for cutting red tape.

BDI and BDA welcome the proposals of the EU Commission asan important step towards enhancing the quality of Europeanlaws. Slimline and efficient regulations for the European singlemarket are decisive for European enterprises. It is to be welco-med that greater obligations are to be imposed on the Counciland on the Parliament regarding the execution of impact as-sessments. However, more ambition would be desirable aimedat the goal of establishing a true control body for all threeinstitutions.

Contacts:Carolina Müller (BDI), c.mueller@bdi.euEric Veillerobe (BDA), e.veillerobe@arbeitgeber.de

Delay in the process of the EP passing a resolution on TTIP Delay in the process of the EP passing a resolution on TTIP

The vote in the plenary session on TTIP – originally scheduledfor 10 June – was deferred at short notice. On 28 May thetrade committee in the European Parliament had approved itsreport on the TTIP negotiations and had introduced it into theplenary. A resolution by the European Parliament sends out astrong signal to the European Commission, although it is not le-gally binding. The European Commission is conducting theTTIP negotiations with the United States.

On 10 June the timetable was for the plenary to first hold a de-bate on TTIP and subsequently to vote on the resolution as wellas on a total of over 200 related submissions. However, on the

evening of 9 June it became known that Martin Schulz, the Pre-sident of the EP, had decided to put off the vote. This is permit-ted by Article 175 of the European Parliament’s rules of proce-dure: if more than 50 amendments and applications for sepa-rate or special votes have been tabled to be decided by theplenary, then after hearing the chairperson of the committee thePresident can request the competent committee to convene asession to examine these amendments or applications.On 10 June the plenary voted by 183 votes to 181 to postponethe debate on TTIP.

On 29 June the trade committee voted on 110 amendments enbloc and referred them back to the plenary. Another en blocvote was held for all the requests for a split or a separate vote.Two amendments had been withdrawn and one cancelled. TheConference of Presidents of the EP now has to decide whetherthe plenary debates and votes on TTIP in July or after the par-liamentary summer recess. With regard to the plenary, it is stillan open legal question whether the proposal of new amend-ments will be permitted. There are also ongoing talks betweenpolitical groups and key MEPs about a potential new compro-mise amendment on ISDS. The President of the EP is authori-sed to introduce amendments for the plenary vote up to the lastminute. The high number of amendments demonstrates that there isstill major disagreement among parts of the committee. Nevert-heless, the European Parliament should soon adopt a stanceon TTIP. It is important that serious progress is made this yearin the TTIP negotiations. The hope remains that the TTIP

BDI/BDA Brussels Update June 2015 04

negotiations will not be held up by the delay in the EuropeanParliament but will be speedily continued on the basis of the ne-gotiating mandate.

On the whole the draft resolution by the trade committee picksup the most important demands made by industry. It is particu-larly welcome that the European Parliament supports a compre-hensive approach in the negotiations. The wording on invest-ment protection gives clear expression to the priorities of thecommittee while at the same time permitting the EU Commis-sion adequate scope for negotiation. In the reconvened sessionof the trade committee on the TTIP resolution the deputiesshould continue to support this wording. It would be a mistaketo reject ISDS from the start and thus put the whole TTIP agree-ment in jeopardy. A reformed investment protection in TTIPwould offer the opportunity of establishing a high global stan-dard for a modernised investment protection and a modernised

investor-state dispute settlement procedure (ISDS). This oppor-tunity must not be allowed to slip away. Owing to the federalstructure of the United States, it will be a very tough task politi-cally speaking to implement the position on core labour stan-dards. Moreover, the United States has already committed itselfto the principles of the ILO core labour standards.

The recommendations of the trade committee took into accountstatements of position by thirteen other committees and nearly900 amendments were discussed.

Contacts:Julia Howald (BDI), j.howald@bdi.euEric Veillerobe (BDA), e.veillerobe@arbeitgeber.de

»Brexit leads to a dead end«»Brexit leads to a dead end«

At the beginning of June, BDI Director General Markus Kerberheld talks in London, amongst others with the BDI’s British part-ner association, the Confederation of British Industry (CBI). Thetalks focused on questions related to the United Kingdom re-maining a Member State of the EU.

On the occasion of the visit by the British Prime Minister DavidCameron to the German Chancellor Angela Merkel (CDU) inBerlin at the end of May, Kerber had stated: »Europe needs astrong and critical British partner in the EU. Only by acting to-gether, we Europeans can still be successful in the world – orwe individually drift into insignificance: By the year 2050, not asingle European country may be listed among the nine biggesteconomies in the world.«

Without the United Kingdom, Kerber said, the European singlemarket would clearly lose importance. As market size is deci-sive for investment decisions, a future independent market with64 million Britons would be overshadowed by the European sin-gle market with currently 500 million consumers. »A Brexitwould lead us all to a dead end. The BDI asks the British gover-nment to clearly commit to the future EU membership.«

According to Kerber, the problems of the EU can only be solvedin a constructive dialogue. Germany and the UK as two econo-mic heavyweights must work even more closely together in theirown interest and in the interest of the whole EU. »The Britishare decisive for us when it comes to deepening the Europeansingle market, opening up access to new markets and advoca-ting for structural reforms to enhance European competitiven-ess,« added Kerber.

Contact:Manuel Kilian (BDI), m.kilian@bdi.eu

BDI/BDA Brussels Update June 2015 05

Council decides on general approach on SUP-directiveCouncil decides on general approach on SUP-directive

On 28 May 2015 the Competitiveness Council approved a ge-neral approach on the proposed directive on a single-memberprivate limited liability companies (COM (2014) 212).

The agreement came as a surprise since the discussions bet-ween the member states had at first resulted in a blocking mino-rity emerging which expressed reservations about possible riskscontained in the proposal (online registration, minimum capital,separation of seat).

Germany rejected the compromise proposal, thus acting consis-tently with a resolution passed by the Bundestag, the Germanparliament, on 7 May 2015. This called on the German govern-ment to reject the SUP if the negotiations failed to achieve aprohibition of the article on the separation of seats. According tothe resolution, the possibility to separate seats would allow anSUP to be set up in another member country with no form ofcorporate co-determination or one with a lower level of co-deter-mination and then to remove the administrative headquartersfrom Germany. In this way existing co-determination rightscould be undermined. The separation of seats originally envisa-ged in Article 10 of the proposed directive is now deleted in thenew general approach and is to be dealt with at the level ofmember states, along with aspects of labour law. However,there was no decision to prohibit a separation of seat.

The concept of an »online registration«, proposed by the Com-mission and extremely controversial, has now been partly revi-sed in the general approach. It is now the respective nationallegal provisions that are to apply for setting up an SUP. Howe-ver, setting up a company online will continue to still be possible

without the founding member having to appear before an autho-rity in a member state. The necessary criteria are to be contai-ned in the Council text. An online form in the respective officiallanguage is to be made available for the individual instrumentsfor constituting an SUP.

The corresponding registration procedure itself, including acheck of the identity and legal, business and operational capa-city of the founding member are subject to the respective natio-nal law. Authorised electronic means of identification are to begranted recognition by the respective registration authorities.However, if these do not comply with the requirements of the re-gulation (EU) 910/2014 governing electronic identification andtrust services for electronic transactions in the single market,the member state can refuse the cross-border online registra-tion of SUPs. This requirement was inserted into the Counciltext at short notice at the instigation of the Hungarian delegati-on. If all the necessary documentation is submitted, the registra-tion is to be carried out within five working days.

The minimum capital requirement of one euro is to be retained.In order to guarantee the protection of creditors, the memberstates can provide for legal reserves to be formed. In addition,according to Article 18 of the directive the member states are toestablish national mechanisms to prevent an SUP from notbeing able to repay its debts after it made distributions. The ori-ginal sole provision envisaged of a certification of solvencystatement can now be supplemented by further mechanisms. Inthis respect the Council text addresses many concerns expres-sed by member states with respect to the risks of money laun-dering and dangers for public order. The BDI also welcomes theCouncil text which comes up with appropriate solutions thattake account of many reservations.

The European Parliament has not yet adopted a position on theproposed directive but the predominant view is a critical one. Adraft report in the competent legal committee is scheduled formid-September 2015 at the earliest.

Contact:Carolina Müller (BDI), c.mueller@bdi.eu

BDI/BDA Brussels Update June 2015 06

Publisher: BDI - Federation of German IndustriesBreite Str. 29; 10178 Berlin; www.bdi.eu

EU Pension Funds Directive: Statement of Position by the EMPL Committee LaysDown Important Markers for Institutions for Occupational Retirement Provisions(IORPs)

EU Pension Funds Directive: Statement of Position by the EMPL Committee LaysDown Important Markers for Institutions for Occupational Retirement Provisions(IORPs)

On 28 May 2015 the Committee on Employment and Social Af-fairs (EMPL) of the European Parliament (EP) voted on the pro-posed directive on the activities and supervision of institutionsfor occupational retirement provisions (EU Pension Funds Di-rective). With its substantial corrections to the EU Commission’sproposal the EMPL members supplied the responsible Commit-tee on Economic and Monetary Affairs (ECON) with a decisiveblueprint for its incipient consultations.

For example, in its position statement the EMPL Committeereaffirmed the fundamental principles of the IORPs. Their socialfunction was emphasised and the triangular relationship bet-ween employer, employee and the IORP was declared to be theguiding principle of the directive. The EMPL Committee conse-quently rightly takes up a stance in opposition to the definitionhitherto by the EU Commission which sees IORPs merely as a»supplier of financial services«. In addition, the EMPL decisivelyrejected the application of quantitative capital requirements toIORPs in line with the principles of Solvency II and thus also re-jected the introduction of a risk-based prudential model alongthe lines of the holistic balance sheet approach. Moreover,through the deletion of the delegated acts they also resoundin-gly quashed the subsequent introduction of capital requirementsby the EU Commission acting then purely on its own authority.

Furthermore, the position statement by the EMPL Committeeexplicitly envisages that personnel from the sponsoring com-pany can undertake activities responsible for occupational reti-rement schemes. This guarantees an efficient and cost-effectiveadministration of many retirement schemes. Finally, the EMPLmembers came out in favour of reduced compulsory informationcontained in notifications of pension entitlement which alsohave to be adapted to specific needs .

The EMPL Committee position statement supports the view ofthe ECON rapporteur Brian Hayes (European People’s Party,Ireland) that IORPs fulfil a central social function. In this func-tion, the interests of the beneficiaries are protected on accountof being organised collectively through collective agreements.They must neither be treated as financial institutions nor mustthe beneficiaries be defined as consumers. MEP Hayes recog-nises on the one hand the relevance of EU coordination in thearea of retirement provisions, on the other hand, he categori-cally rejects the total harmonisation approach of the proposeddirective because of the diversity of national retirement pensi-ons systems. In a hearing of IORP experts from industry he or-ganised for the the ECON Committee on 26 May, he made itclear that the Commission’s proposal must be adapted to theconcrete practical requirements of retirement provisions on thebasis of the respective national circumstances. It is planned thatMEP Hayes will submit his draft report in mid-July. The vote onthe directive in the ECON Committee will be taken inNovember.

Contact:Séverine Féraud (BDA), s.feraud@arbeitgeber.de

Photo credits:Adpic/H.Dora (1, 2), Fotolia/Martin Schmidt (1, 2), BDI (1, 3),BDI/Christian Kruppa (1, 4), Fotolia/Alexei Fateev (1, 5)

Editors: Joscha Ritz (Responsible in terms of German Press Law), Leonie DackThe responsibility for the content of external contributions rests with the respectiveauthor.