special report - European Voice

4
30 May 2013 NEWS
BUSINESS IN BRIEF
Data-roaming takeover
The European Commission
yesterday (29 May) approved
the acquisition of Mach, a
data-connection company
based in Luxembourg, by
American company Syniverse.
Both firms provide mobile
roaming services. The approval
is conditional upon the divestiture
of Mach’s data-clearing
and roaming data-exchange
services in the European
Economic Area.
Chip deal wrapped up
Canadian food company
McCain was cleared yesterday
to acquire Belgian potato
processor Lutosa. Lutosa’s
branded frozen-chip business
in the EEA must be divested.
EIB lending
The European Commission last
week (23 May) adopted a proposal
to increase lending by
the European Investment Bank
outside the EU. The proposal
would focus resources on tackling
climate change and supporting
the pre-accession partners
and the EU’s southern and
eastern neighbours. The new
legislation covers the period
2014-20 and is expected to be
adopted in the coming year.
Labelling merger
Swedish label and processingpaper
company Munksjö was
cleared to merge with Finnish
company Ahlstrom by the
European Commission on Friday
(24 May). Both operate in
the specialty paper industry.
Ahlstrom must divest its
abrasive paper backings and
pre-impregnated paper business
in Germany.
Electronics projects
The Commission announced
yesterday (29 May) that it will
spend €100 million on the first
five projects of the European
Electronics Strategy, launched
last week. The projects focus
on microchips, aiming to link
European manufacturers with
technology companies, chip
designers, researchers, and
universities at the earliest
stages of product development.
Funding will rise to a
total of €700m once member
state and industry contributions
are added.
FINANCE Long-term budget
New momentum
in budget talks
Focus shifts to specific
areas of diagreement
Latest negotiations have
been “constructive”
Toby Vogel
tobyvogel@economist.com
Dave Keating
davekeating@economist.com
Industry and business ministers
have given a cool reception
to European Commission
attempts to impose
obligations on companies to
rotate their auditors.
At a meeting of the EU’s
competitiveness council in
Brussels yesterday (29 May),
ministers cast doubt on the
Commission’s proposal to revise
the audit directive. The
proposal, put forward at the
end of 2011, would require
companies with public interest
implications, such as financial
institutions, to
change auditors every six
years.
The EU would also draw
up a blacklist of non-audit
services that auditors would
be forbidden to provide.
Most ministers said that
while they could support a
blacklist, the Commission’s
proposal would exclude too
many services. “We agree
EAMON GILMORE Ireland’s deputy prime minister. EC
Negotiations between
the European
Union’s institutions
on the EU’s budget for 2014-
20 turned for the first time
this week to the substantive
areas of disagreement.
Up to now, the talks between
the European Parliament,
the Council of Ministers,
represented by Ireland,
and the European Commission
have been largely procedural.
But Eamon
Gilmore, Ireland’s deputy
prime minister, who chaired
three and a half hours of negotiations
on Tuesday (28
May), said that there had
been “new momentum” in
the talks. “We made real
progress,” he said.
Officials described the atmosphere
as “constructive”.
“Differences of views remain
but I can also see the
scope for agreement,” Gilmore
said. “I remain convinced that
we can reach an agreement
over the coming weeks.”
The negotiators have set
themselves a deadline of the
end of June for reaching an
agreement.
Ireland and the MEPs
asked Janusz Lewandowski,
the European commissioner
for financial programming
and budget, to draft compromise
texts on four elements
of the €960 billion
multi-annual financial
framework for 2014-20 that
are at the heart of the negotiations.
The four areas of
disagreement are the flexibility
of the EU budget, a revision
clause, the future of
the EU’s own resources, and
the unity of the EU budget.
Concessions
In all these areas, the MEPs
had demanded concessions
when in March they rejected
a deal struck between the
national governments at
February’s meeting of the
European Council.
The Council and the MEPs
asked Lewandowski to produce
the compromise texts in
time for the next round of political
negotiations, which is
scheduled to take place next
Tuesday (4 June). Technical
meetings to propose Tuesday’s
talks are scheduled for
today (30 May). The Parliament’s
budget committee will
discuss the state of the negotiations
today.
An official said that the
meeting produced “the best
we could hope for”. “Now we
are past the stage when you
are asking yourself whether
with the principle, but the list
currently drafted would prohibit
almost all non-audit
services,” said Stephen Green,
UK minister for investment.
“We need to thin out the
number of measures on the
list,” agreed Philipp Rösler,
German economy minister.
Several ministers said they
doubted that rotation would
improve audit quality. The
European parliament’s legal
affairs committee voted last
month to extend the maximum
permitted period without
rotation to 14 years.
Ministers were evenly split
on whether the EU should
give oversight of auditing to
the EU’s European Securities
and Markets Authority, as
proposed by the Commission.
Many ministers support
an alternative proposal from
Germany to expand the remit
of the existing decentralised
network of national
oversight bodies. “We support
the alternative lighttouch
approach,” said Green.
you are negotiating or not,”
the official said. “Now we are
down to business.”
MEPs are also linking
their backing for the longterm
budget to member
states’ agreement to meet
shortfalls in the annual
budgets, whether carried
over from last year or emerging
in 2013. Lewandowski at
the end of March asked for
€11.2bn in additional contributions
from the member
states to finance the deficit;
the member states earlier
this month agreed in principle
to pay €7.3bn up front
and come back to the remainder
later this year.
Lewandowski has delayed
submitting a draft annual
budget for 2014 – the first of
the next multi-annual cycle
– to the college of commissioners.
The college was
initially scheduled to adopt
the draft budget yesterday
(29 May). Under the EU’s
budget procedure, the draft
annual budget has to be presented
by the Commission
by 1 July.
Ministers wary of strict auditor rules
But Michel Barnier, the
European commissioner for
the internal market, said a
centralised authority was
needed. “It would be in all of
our interests to save costs by
pooling resources and using
ESMA,” he told the ministers.
“I am happy to work on the
contents of the blacklist,” he
said.
Ministers also discussed
state aid reforms and recommendations
for EU copyright
law. The council will today
discuss space industrial policy
and the space surveillance
programme.
On Tuesday (28 May) the
Commission released its annual
report on EU competition
policy.
It showed the Commission’s
action in 2012 focused
on financial services, key
network industries such as
energy, telecoms and postal
services, and knowledgeintensive
markets such as
smartphones, e-books and
pharmaceuticals.
NEWS
SPECIAL
Member
states given
more time to
cut deficits
Commission recommends
economic reforms
France and Spain win
budget reprieve
Peter O’Donnell
peterodonnell@economist.com
The European Commission
yesterday (May
29) issued recommendations
of economic reform
for 23 of the European
Union’s member states, but
eased its demands of various
struggling countries.
The recommendations,
which will become the basis
for discussion at next month’s
European Council, confirm
the fragility of economic recovery
in the eurozone.
The country-specific recommendations
are made on a
review of each member state’s
economic and social performance.
They concentrate on
what should be achieved in
the next 12-18 months. The
Commission does not make
recommendations for the
countries that are receiving
EU bail-outs – Greece, Portugal,
Ireland and Cyprus – because
they are already subject
to recommendations made as
a condition of the loans.
The deluge of material released
yesterday contains a
sombre diagnosis of the economic
situation in most
member states. But it also
contains numerous attempts
to balance the picture with
optimistic assessments of
progress.
The recommendations suggest
that the Commission is
weakening in its commitment
to austerity. Extra time is to be
allowed for Spain, France, the
Netherlands, Poland, Portugal
and Slovenia to correct their
excessive deficits, while Belgium
has been spared sanctions
for backsliding.
The Commission offers a
justification for its indulgence:
“Fiscal consolidation and
growth are not mutually exclusive,
and the EU has been
consistently recommending
fiscal ways to boost growth,
including by improving the
efficiency of public expenditure
and increasing the fairness
and effectiveness of tax
systems.” It warns the six
countries that are being
granted a delay: “This is not a
chance to relax reform efforts
– on the contrary, this breathing
space should be used to
intensify reforms, continue reducing
debt and pave the way
for a sustainable recovery.”
The recommendations cover
public finances, with a
focus on reforms of taxation,
pension and health systems,
and the labour market, selected
as holding out hopes of improving
competitiveness and
reducing high unemployment.
The EU “is tackling the serious
structural problems that
built up over the last decade”,
says the Commission, “and