Year: 2020

The “mandatory” contact-tracing App “StayAway COVID” – a matter of European Union Law

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by Alessandra Silveira, Joana Covelo de Abreu (Editors) and Tiago Sérgio Cabral (Managing Editor)

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1. During the previous week there as been plenty of controversy regarding a proposal by the Portuguese Government to make the installation of the App “StayAway COVID” (“App”) – a mobile contact-tracing application designed to fight the pandemic – mandatory for large sections of the population. While the Government appears to have backed down from this idea (for now) the issue of European Union Law (“EU Law”) has been surprisingly absent from most of the debate around a measure of this nature, even though it should be front and centre and precedes even the issue of constitutionality.

As we will show in this text, it is difficult to argue against the conclusion that this subject should be considered as a matter of EU Law – and, consequently, that this is a question of fundamental rights protected by the European Union (“EU”). In the EU’s legal framework, privacy and personal data protection are fundamental rights enshrined within Article 16 of the Treaty on the Functioning of the EU and Articles 7 and 8 of the Charter of Fundamental Rights of the EU (CFREU). Since it is a matter regulated at EU level, the EU’s standard of fundamental rights’ protection is applicable before and above even the national constitutional standards of protection[i]. So, this is not just a Portuguese constitutional problem that can be solved in the light of the Portuguese Constitution – it is an issue of relevance to all European citizens which needs to be resolved in the light of the EU´s (jus)fundamental standards (see Article 51 CFREU).[ii] It is important to be aware that the Court of Justice of the EU (“ECJ”), in the past, struck down constitutional provisions from Member States to ensure the adequate protection of fundamental rights of privacy and personal data protection[iii]. This is because all Member States do not have the same level of (jus)fundamental protection.

2. Under the current legal framework in the EU, enforcing the use of any contact-tracing application to the general public (or to large sections of the general public such as the entire population inserted within the labour market, academia, schools and public administration) would always face some serious challenges.

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Editorial of October 2020

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by Filipe Marques, President of MEDEL (Magistrats Européens pour la Démocratie et les Libertés)

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Rule of Law in the European Union: the danger of a systematic change of the concept?

In the last day of September 2020, the European Commission publicly presented the first Rule of Law Report, intended to give an overview of the situation of Rule of Law in all twenty-seven EU Member States[i]. In the introductory words of this document, it is stated the Rule of Law, together with fundamental rights and democracy, “are the bedrock of our societies and common identity”.

The report came out just two weeks after President Ursula Von der Leyen, in her first State of the Union speech before the European Parliament Plenary, recognized that “the last months have also reminded us how fragile [Rule of Law] can be” and pledged to “always be vigilant, to care and nurture for the rule of law” [ii].

The current and ongoing situation in the EU, however, is much too serious to be tackled only with nice words in a speech or data collected in a report. The events and signs coming directly from the ground clearly show us that the time to act is now, before we reach a point of no return.

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New Pact on Migration and Asylum – first impressions and old deceptions

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Ana Maria Rodrigues, PhD candidate and Lecturer at UMINHO
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Last week, the European Commission has launched its long-awaited proposal for a New Pact on Migration and Asylum. Alongside the new Pact comes a hoard of political and legislative proposals. The said intention is to set a new European framework that can, on the one hand, acknowledge collective responsibilities, on the other hand, address the fundamental concerns with solidarity (or lack of), and finally, tackle the implementation gap.

Proposals comprise a new regulation on asylum and migration management, a new regulation establishing a common procedure for international protection (therefore repealing the corresponding Directive), a new regulation introducing a screening of third-country nationals at the external borders, a new regulation addressing situations of crisis and force majeure in the field of migration and asylum (therefore repealing the temporary protection directive), and a new regulation on Eurodac (aimed at replacing the current one), as well as several other soft law instruments and some of the 2016 reform proposals on which political agreement was reached.

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Financial Supervision Models

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Marina Barata, Master's in Law
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The debate on the structure and functioning of the European financial system is necessarily linked to the discussion regarding the financial supervision models.

This is not a recent issue, since it resurfaces with every financial crisis, but it is still relevant, especially if we take into account that the globalization movement brings along a greater propensity for instability in the financial sector given the risk of contagion, systemic risk or the domino effect.

Financial globalisation has gradually, in the name of synergies and competitive advantages, blurred the boundaries between the various sectors of financial activity, allowing the financial conglomerates to emerge.

Today, in addition to the traditional credit function of banking — raising savings or other repayable funds and transferring them on own account to other economic agents through loans or other forms of financing — Banks can provide investment services, operate on the stock exchange, invest in own account in real estate, and mediate insurance.

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Labor Apartheid: the next frontier of social inequality and the role of European Union

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Maria Fernanda Brandão, Master's degree student in EU Law at UMinho
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Guiding the reasoning by the dialectic theory, in the perspective of Hegel and Marx, it is possible to contemplate the history of humanity as an inexhaustible class struggle. The conflict between dominant and dominated groups is one of the main legacies of the human action throughout the time. Thesis, antithesis, and synthesis, this seems to be the endless plot of the path taken by man.

The perspective of what is a ruling class is modified routinely over the centuries. In the last two, the polarization have been between the owners of the productive ways and assets and the wage-earning workers, which is, by the way, the feature of the capitalism and its intrinsic contradiction and, despite the conflict, the existence of both classes is necessary for the maintenance of the economic system.

However, several social transformations that occurred throughout the 20th century created new outcast groups in need of society’s attention for its integration. This was the case of women, in the search for effective equality in terms of labor rights, or the disabled and ethnic minority groups, and their notorious difficulty in employability. The State’s action, in all these cases, has been affirmative policies, such as the setting of quotas, subsidies and social integration campaigns.

However, the fourth industrial revolution sheds new light into these issues since a significant portion of the existing jobs is currently at risk of extinction due to the extreme robotization associated with the existence of artificial intelligence (AI). What can be seen, therefore, is a complete change of paradigm that places individuals of the most diverse shades on the same losing side, concentrating people of different races, genders, ages, social strata and schooling in the same group, deepening the inequality that has only skyrocketed since the welfare state collapsed in most parts of the world. This is what we call labor apartheid, due to the profound segregation of human beings from work and consumption caused by their productive unavailability. Continue reading “Labor Apartheid: the next frontier of social inequality and the role of European Union” →

The Impact of the Services Directive 2006/123/EC in Portugal and Spain and its effects on the Legaltech Industry

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by Pedro Petiz, Master’s student in Law and Informatics at UMinho
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“Just think what Europe could be. Think of the innate strengths of our enlarged Union. Think of its untapped potential to create prosperity and offer opportunity and justice for all its citizens. Europe can be a beacon of economic, social and environmental progress to the rest of the world.”[i]

This auspicious introduction belongs to the Communication from the European Commission, “Working together for growth and jobs – A new start for the Lisbon Strategy”.

To reach Europe’s “untapped potential” for prosperity, the Lisbon Strategy aimed at the completion of the Single Market in the area of the energy, transport, public procurement, financial services, and in the area of regulated professions.[ii]

The Services Directive (2006/123/EC) played an important role in this objective, since it required Member States to take concrete legislative measures to abolish the restrictions on the freedom to provide services that were found as being unnecessary and disproportionate.[iii]

This also encompassed the rules on the liberal professions, such as fixed minimum or maximum tariffs [Article 15(2)(g)], restrictions on advertising (Article 24), and – most importantly – restrictions on multidisciplinary partnerships (Article 25).

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Editorial of September 2020

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by Alessandra Silveira, Joana Abreu and Pedro M. Froufe, Editors and Jean Monnet Module eUjust Team

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The German Presidency of the Council of the European Union – the European digital path in justice fields in times of COVID-19


On the 1st July 2020, the Federal Republic of Germany has received the task of holding the Presidency of the Council of the European Union until the 31st December 2020, as this European Institution operates through a system of rotating presidency. This Member State will be closely working in a group of three – the so-called “trio” – which will also be composed by Portugal and Slovenia.  

Therefore, as the world is still struggling with the COVID-19 pandemic, it is experiencing a “time of unprecedented crisis”, which has to be strongly addressed by this presidency and has to be perceived as its transversal priority so a more resilient European Union can emerge from this challenge.

Insofar, the motto of this Germany’s presidency is “Together for Europe’s recovery” since, as Chancellor Merkel underlined, “[w]e know that we can only master this extraordinary crisis in the best possible way if we work together”, “together” has to mean the engagement of governments, parliaments and citizens all across Europe.

Under the Programme for Germany’s presidency[i], “[o]nly by containing the SARS-CoV-2 virus in the long term, investing in Europe’s economy, fully exploiting our innovative potential and strengthening social cohesion can the European Union and its Member States overcome the crisis effectively and permanently”. As crisis were always doors that led to new opportunities in the European Union, this presidency believes there is a need to “focus [the] attention on the major transformation processes of our time such as climate change, digitalisation and the changing world of work”.

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Summaries of judgments

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Summaries of judgments made in collaboration with the Portuguese judge and référendaires of the CJEU (Nuno Piçarra, Mariana Tavares and Sophie Perez)
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Judgment of the Court (Fourth Chamber) of 11 June 2020, LE v Transportes Aéreos Portugueses SA, Case C-74/19, EU:C:2020:460

Reference for a preliminary ruling — Air transport — Regulation (EC) No 261/2004 — Article 5(3) — Article 7(1) — Compensation to passengers in the event of denied boarding and of cancellation or long delay of flights — Exemption — Concept of ‘extraordinary circumstances’ — Unruly passengers — Possibility of relying on the occurrence of an extraordinary circumstance in respect of a flight not affected by that circumstance — Concept of ‘reasonable measures’

Facts

The dispute in the main proceedings is between a passenger and the air carrier Transportes Aéreos Portugueses (TAP) concerning its refusal to compensate that passenger whose connecting flight was subject to a long delay in arrival at its final destination. The passenger in question had made a reservation with TAP for a flight from Fortaleza (Brazil) to Oslo (Norway) with a stopover in Lisbon (Portugal).  The flight was operated on 21 and 22 August 2017 with a delay in arrival in Oslo of almost 24 hours. The delay was due to the fact that the passenger in question was unable to board the second leg of the connecting flight from Lisbon to Oslo because of a delay in the arrival of the first flight from Fortaleza to Lisbon. This delay was due to the fact that the aircraft which operated that flight, on its previous flight from Lisbon to Fortaleza, had had to be diverted to Las Palmas de Gran Canaria (Spain) in order to disembark an unruly passenger who had bitten a passenger and assaulted other passengers and members of the cabin crew. The passenger in question was therefore flown to Oslo on the next flight operated by TAP the following day.
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The poor relation of tax harmonisation in the European Union – Direct Taxation

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 by Irene Isabel das Neves, Associate Judge, President of the Administrative and Fiscal Courts of the Northern Area (Portugal)

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In the field of direct taxation, European law lacks concrete regulation, which leads to a lack of tax harmonisation, as opposed to indirect taxation, namely with the Value Added Tax (VAT) and Excise Duties (ED). However, several directives and the case law of the Court of Justice of the European Union (CJEU) itself are establishing a set of “harmonising” dynamics enforced at the level of direct taxation on the income of companies and individuals. In parallel, measures have been implemented to prevent and eliminate tax evasion and double taxation.

The proper functioning of a European internal market assumes a level playing field, i.e., it depends on tax neutrality arising from the standardisation of corporate taxes. The internal market is in fact the meeting point for European demand and supply: in this market, tax disparities disrupt trade and commerce, because even when similar products are involved, the most heavily taxed goods are less competitive and less attractive to consumers (distortion by demand); similarly, in the absence of uniformity of taxes, the choice of location of businesses within the Union may be linked to tax considerations (distortion by supply).
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Summaries of judgments

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Summaries of judgments made in collaboration with the Portuguese judges and référendaire of the General Court (Maria José Costeira, Ricardo Silva Passos and Esperança Mealha)
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Judgment of the General Court (First Chamber, Extended Composition) of 28 May 2020, T-399/16, CK Telecoms UK Investments/Commission

The facts

On 11 May 2016,[i] the Commission adopted a decision in which it blocked, under the Merger Regulation,[ii] the proposed acquisition of Telefónica UK (‘O2’) by Hutchison 3G UK3 (‘Three’).

According to the Commission, that acquisition would have removed an important competitor on the United Kingdom mobile telephony market and the merged entity would have faced competition only from two mobile network operators, Everything Everywhere (EE), belonging to British Telecom, and Vodafone. The Commission considered that the reduction from four to three competitors would probably have led to an increase in prices for mobile telephony services in the UK and a restriction of choice for consumers. The acquisition would also have been likely to have a negative influence on the quality of services for consumers, hindering the development of mobile network infrastructure in the UK. Lastly, it would have reduced the number of mobile network operators wishing to host other mobile operators on their networks.

Three brought an action before the General Court seeking annulment of the Commission’s Decision.

The Judgment

The General Court annuls the Commission’s decision to block the proposed acquisition of Telefónica UK by Hutchison 3G UK in the sector of the mobile telephony market.

A. The effects of the operation on prices and on the quality of services for consumers have not been proved to the requisite legal standard.

The Commission’s assessment was based on the consideration that the acquisition would have eliminated competition between two powerful players on the UK mobile telephony market, one of which, Three, is allegedly an important competitive force on the UK mobile telephony market and the other of which, O2, allegedly holds a strong position: together, the two would have been the market leader, with a share of approximately 40%. In particular, it seemed likely to the Commission that the merged entity would have been a less aggressive competitor, that it would have increased prices and that, moreover, the concentration would have been likely to have a negative impact on the ability of the other operators to compete on price and by means of other parameters (innovation, network quality).

After clarifying the scope of the change made by the Merger Regulation, as well as the burden of proof and the standard of proof in relation to concentrations, the General Court finds that the Commission’s application of the assessment criteria of the so-called ‘unilateral’ (or ‘noncoordinated’) effects – namely, the concept of ‘important competitive force’, the closeness of competition between Three and O2 and the quantitative analysis of the effects of the  concentration on prices – is vitiated by several errors of law and of assessment.

The Court acknowledges that the Merger Regulation allows the Commission to prohibit, in certain circumstances, on oligopolistic markets concentrations which, although not giving rise to the creation or strengthening of an individual or collective dominant position, are liable to affect the competitive conditions on the market to an extent equivalent to that attributable to such positions, by conferring on the merged entity the power to enable it to determine, by itself, the parameters of competition and, in particular, to become a price maker instead of remaining a price taker. However, the mere effect of reducing competitive pressure on the remaining competitors is not, in principle, sufficient in itself to demonstrate a significant impediment to effective competition in the context of a theory of harm based on non-coordinated effects.

As regards the classification of Three as an ‘important competitive force’, the Court finds that the Commission erred in considering that an ‘important competitive force’ need not necessarily stand out from its competitors in terms of its impact on competition. If that were the case, that position would allow it to treat as an ‘important competitive force’ any undertaking in an oligopolistic market exerting competitive pressure.

In addition, as regards the assessment of the closeness of competition, the Court finds that, although the Commission established that Three and O2 are relatively close competitors in some of the segments of a market, that factor alone is not sufficient to prove the elimination of the important competitive constraints which the parties to the concentration exerted upon each other and therefore to establish a significant impediment to effective competition.

The Court also finds that the Commission’s quantitative analysis of the effects of the concentration on prices does not establish, with a sufficiently high degree of probability, that prices would increase significantly.

B. The Commission failed to show that the effects of the concentration on the network-sharing agreements and on the mobile network infrastructure in the UK would constitute a significant impediment to effective competition

The current four mobile network operators in the UK are parties to two network-sharing agreements: on the one hand, EE and Three have brought together their networks under the ‘Mobile Broadband Network Limited’ – MBNL joint venture; on the other hand, Vodafone and O2 have brought together their networks to create ‘Beacon’. That enables them to share the costs of rolling out their networks while continuing to compete at the retail level.

According to the Commission, the future development of the mobile network infrastructure in the UK would have been hindered to the extent that the merged entity would have been party to both network-sharing agreements, MBNL and Beacon. That entity would have been afforded an overview of the network plans of the two remaining competitors, Vodafone and EE, and the possibility of weakening them, thereby hindering the future development of the mobile network infrastructure in the country. In particular, according to the Commission, one of the ways of weakening the competitive position of one or other of the partners in the network-sharing agreements would be to degrade the network quality of that agreement. For the Commission, that seems particularly relevant for the partner in the network-sharing agreement that would not become the basis of the merged entity’s consolidated network.

The Court finds that a possible misalignment of the interests of the partners in a network-sharing agreement, a disruption of the pre-existing network-sharing agreements, or even the termination of those agreements do not constitute, as such, a significant impediment to effective competition in the context of a theory of harm based on non-coordinated effects.

In that regard, the Court notes, first, that the effects of the concentration in relation to a possible exercise of market power, in the form of a degradation of the services offered by the merged entity or of the quality of its own network, were not analysed in the contested decision, even though the assessment of a possible elimination of important competitive constraints between the parties to the concentration and a possible reduction of competitive pressure on the remaining competitors should lie at the heart of the assessment of the non-coordinated effects arising from a concentration.

The Court notes, second, that, even if the merged entity had favoured one of the two networksharing agreements and was induced in particular to reduce the costs associated with the other network, that could not have a disproportionate effect on the position of the other partner in the network-sharing agreement or constitute a significant impediment to effective competition, since the Commission has failed to make the case that the other party would have neither the ability nor the incentive to react following an increase in its costs and would simply cease to invest in the network.

C. The effects of the concentration on the wholesale market were not found to be sufficient to establish the existence of a significant impediment to effective competition

In addition to the four mobile network operators, there are also several ‘virtual’ operators on the UK mobile telephony retail market, such as Virgin Media, Talk Talk and Dixons Carphone which use the infrastructure of the ‘host’ mobile network operators to provide their services to consumers in the UK.

According to the Commission, the loss of Three as an ‘important competitive force’ and the ensuing reduction in the number of host mobile networks would have placed the virtual operators in a weaker negotiating position to obtain favourable wholesale access conditions.

The Court finds that neither Three’s wholesale market shares nor their recent increase justify its classification as an ‘important competitive force’. The mere fact that Three had more of an influence on competition than its market share would suggest is not sufficient to establish the existence of a significant impediment to effective competition, particularly as it was not disputed that Three’s market share was small.

[i] Commission Decision C(2016) 2796 of 11 May 2016 declaring the operation incompatible with the internal market (Case COMP/M.7612 — Hutchison 3G UK/Telefónica UK).

[ii] Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1), as implemented by Commission Regulation (EC) No 802/2004 of 7 April 2004 (OJ 2004 L 133, p. 1).

[iii] Hutchison 3G UK Investments Ltd, an indirect subsidiary of CK Hutchison Holdings Ltd, became the applicant, CK Telecoms UK Investments Ltd.

Judgments of the General Court (4th Chamber) of 12 March 2020, Cases T-732/16, Valencia Club de Fútbol v Commission and T-901/16 Elche Club de Fútbol v Commission

State aid — Aid granted by Spain to certain professional football clubs — Guarantee — Decision declaring the aid to be incompatible with the internal market — Advantage — Firm in difficulty — Private investor test — Guidelines on State aid for rescuing and restructuring firms in difficulty — Amount of the aid — Recipient of the aid — Principle of non-discrimination — Duty to state reasons

Facts

Between 2009 and 2010, the Instituto Valenciano de Finanzas (‘the IVF’) — the financial establishment of the Generalitat Valenciana (Regional Government of Valencia, Spain) — granted a number of guarantees to associations linked to three Spanish professional football clubs from the Autonomous Community of Valencia, Valencia CF, Hércules CF and Elche CF. Those guarantees were intended to cover the bank loans taken out by those associations in order to participate in the increase in the capital of the three clubs to which they were linked. In Valencia CF’s case, the guarantee granted was increased in 2010 in order to cover the increase of the underlying bank loan.

By decision of 4 July 2016, the Commission found that those measures constituted unlawful State aid incompatible with the internal market in favour of the three football clubs, and consequently it ordered their recovery.

The three clubs each brought an action before the General Court with a view to annulling the Commission’s decision.

By judgment of 20 March 2019, the Court annulled the Commission’s decision in relation to Hércules CF.

By judgments of 12 March 2020, the Court annuls the Commission’s decision in relation to Valencia CF and Elche CF.

Judgment T-732/16 Valencia Club de Fútbol v Commission

First of all, the Court examines the assessments relating to the guarantee given by the IVF to cover the bank loan granted to the association linked to Valencia CF, the Fundación Valencia. It considers that the Commission made a manifest error of assessment in that respect by finding that no equivalent guarantee premium could be found on the market. After correctly classifying Valencia CF as a ‘firm in difficulty’, the Commission wrongly assumed that no financial establishment would act as a guarantor for a firm in such a situation and, consequently, that no corresponding guarantee premium benchmark could be found on the market. Furthermore, it did not carry out an overall assessment taking into account all relevant evidence enabling it to determine whether Valencia CF would manifestly not have obtained comparable facilities from a private investor.

The Court also considers that the Commission did not sufficiently support the finding that there was no market price for a similar non-guaranteed loan ‘due to the limited number of observations of similar transactions on the market’.

Next, the Court examines the assessments relating to the increase in the guarantee decided in 2010. The Commission had, inter alia, concluded that the shares in Valencia CF acquired by the Fundación Valencia and pledged to the IVF as a counter-guarantee had a value ‘close to zero’ on the date that increase was granted, since Valencia CF, in particular, was in difficulty and was operating at a loss. The Court finds that the evidence on which the Commission’s conclusions on that point are based are partly incorrect, in that the financial year preceding that grant closed with a profit. It also considers that the Commission made a manifest error of assessment in that respect, because it did not take into account relevant factors, such as the existence of the club’s significant own equity and the generation of a profit before taxes in the fiscal year preceding the grant of the increase. Those errors vitiate the Commission’s assessment of the value of the counter-guarantees provided by the Fundación Valencia and, consequently, its calculation of the amount of the aid arising from the increase of the guarantee.

Judgment T-901/16 Elche Club de Fútbol v Commission

The Court finds that the Commission’s assessment of the existence of an advantage from which Elche CF benefits is vitiated by manifest errors of assessment.

In the first place, the Commission made a manifest error of assessment by not taking into account the economic and financial situation of the borrowing association linked to Elche CF, the Fundación Elche. The Court states that this is a relevant factor for the purposes of evaluating the risk taken by the State guarantor and, thereby, the guarantee premium which a private operator would claim in those circumstances. Although the Fundación Elche is not identified by the Commission as being the actual beneficiary of the loan, it did benefit from the guarantee at issue under the contract concluded with the IVF and was accountable to the IVF for the consequences, as the case may be, of activating the guarantee.

In the second place, the Court states that the Commission made a further manifest error of assessment by also failing to take into account, for the purposes of examining the existence of an advantage, the relevant fact of the mortgage on land which the Fundación Elche had granted to the IVF as a counter-guarantee.

In the third place, the Court considers that the Commission was wrong not to take into account the recapitalisation of Elche FC for the purposes of assessing the value of the shares in Elche FC, pledged to the IVF as a counter-guarantee, which the Commission found to be ‘close to zero’.

In the fourth place, the Court states, as it did in relation to Valencia CF, that the Commission, after finding that Elche CF was a firm in difficulty, wrongly assumed that no financial establishment would act as a guarantor for such a firm and therefore that that no corresponding guarantee premium benchmark could be found on the market. Similarly, the Court criticises the Commission for not sufficiently substantiating its conclusion relating to the lack of comparable transactions to establish the market price of a similar non-guaranteed loan.