The European private company statute (SPE), the EU patent, collective redress, consumers’ rights, and late payments in commercial transactions: each of these topics is the subject of a legislative initiative or at least of serious reflection in the EU. The overall picture for these issues is nothing to brag about: the only one being wrapped up is the future directive harmonising payment deadlines in the EU. On the others, in spite of the business world’s high hopes, there is still a long road ahead. Some are only in the early stages while others are awaiting final agreement among the different EU institutions. The process is long and tedious but of the utmost importance considering the impact of these legislative acts.

COLLECTIVE REDRESS: AT A STANDSTILL

According to Commissioner Viviane Reding, responsible for justice and fundamental rights, the idea of introducing collective redress at European level is at a total standstill. She noted that, for now, “there are no legislative initiatives on the agenda […] for redress related to either anti-trust legislation or consumer law”. Her remarks, which were a corollary to a series of interviews with representatives of US industry, sparked intense reactions. No one expected such deadlock considering support for the idea of the right to redress for violations of EU competition law and consumer protection law. Even the other commissioners concerned, namely Joaquin Almunia (competition) and John Dalli (consumers), had reiterated their support for a collective redress system. According to informed sources, the Commission was supposed to discuss the matter, on 12 October, based on a memorandum. Thirteen member states currently have collective redress mechanisms but there is no European system. Some 10% of litigation nevertheless entails a transnational dimension.

CONSUMERS’ RIGHTS: TARGETS

The draft directive on consumers’ rights is not expected to be given fresh impetus before 2011. The very principle of the text, namely total harmonisation of consumers’ rights, which would prohibit member states from maintaining or introducing national measures that differ from those in the directive, is meeting strong opposition. Under the ordinary procedure, the European Parliament’s rapporteur, Andreas Schwab (EPP, Germany), with the Commission’s support, therefore opted for total but targeted harmonisation. That was the position defended upon presentation of his report, in June 2010, in any case. This means that derogations from some provisions could be possible, if they are necessary, proportionate and effective. The report suggests that member states should have the right to keep their provisions on remedies for non-delivery of goods, as well as compensation and guarantee periods in cases of product non-conformity. On contracts, the text endorses the principle of a black list of nine unfair clauses and a non-exhaustive grey list of other clauses that could be considered unfair. It nevertheless adds that both lists could be completed by member states if necessary. Parliament is only in the early stages of its legislative work and is set to vote around February 2011. The direction it chooses will influence the work of the Council, which is expected to review the matter more closely before the end of the year (December 2010).

LATE PAYMENT: AGREEMENT CONCLUDED

MEPs will be voting at the plenary session, on 18-20 October, on the agreement between Parliament and the Council on the directive that harmonises payment deadlines in the EU. The text was approved by the EP’s Committee on Internal Market (IMCO), on 5 October, and by the Council, on 12 October. Rapporteur Barbara Weiler (S&D, Germany), the Commission and the Belgian Council Presidency have all stressed that the text is a compromise and the best arrangement possible given strong opposition in the Council.

The text - a recast of Directive 2000/35/EC currently in force - aims to prevent late payment and reduce bureaucracy to ensure that businesses can keep a firm financial footing and invest more to stimulate the Union’s economic recovery. It limits the payment period to 30 days for goods and services, for both the public and private sectors. Only exceptional circumstances will allow lengthening of the period, which may not exceed 60 days for the public authorities.

Interest due for late payment corresponds to the reference rate plus 8% (the Council sought 7%, while MEPs pushed for 9%). A flat rate of €40 would be due for recovery costs.

The verification period during which the customer/client ensures that the product or services meet the contract terms is set at 30 days. This point is particularly important because many use the argument of the verification period as an excuse to delay payment.

EU PATENT: PRESIDENCY OPTIMISTIC

At the Competitiveness Council, on 11 October, Belgian Economy Minister Vincent Van Quickenborne observed that a compromise on the issue of the translation of EU patents was probably still possible. Although “a small minority is holding out,” he is confident of being able to rally a majority through bilateral talks. Spain and Italy reject both the Commission’s proposal, which they consider discriminatory because it excludes their respective languages, and the concessions won by the Belgian Presidency aimed mainly at covering translation costs.

To reduce the cost of patents (and work out a solution on this tough issue, which has been in abeyance for more than 30 years), the Commission submitted a proposal in July 2010 based on the languages used at the European Patent Office (EPO), namely English, French and German. The patent would be registered in one of these three languages and the claims – the central part of the patent that describes the extent of protection granted to the invention – would be translated into the other two languages. A number of member states have made their support conditional on the possibility of obtaining quality automatic translations into the 22 EU languages. Some delegations pushed for a transitional period during which, in addition to one of the three languages, the patent would have to be translated completely into the usual language for technological research and international publications, namely English. Spain had little success with its alternative proposal for the use of English alone.

SPE: COMPROMISE HELD UP IN COUNCIL

After the European company statute, which entered into force in October 2004 and basically concerns large groups and multinationals, the European Commission adopted as part of the Small Business Act, on 25 June 2008, a draft regulation on the European private company, intended for small and medium-sized enterprises (SMEs). This matter requires unanimity and has been held up in Council since December 2009. The 27 member states are at odds on two points: the registered office and employee participation.

The first question concerns the problem of dissociation of the registered office, ie the possibility for a company to establish its registered office in another member state while keeping its main activity in the home country. Latvia, Luxembourg and Belgium fear social dumping even though only commercial law is taken into account, not labour law.

The second concerns the threshold from which the rules in the Commission’s proposal on employee participation would apply, the principle being that the European private company would observe employee participation rules in the member state where it is established. Hungary, the Netherlands, Austria, Finland, Estonia, Italy, Poland and Belgium have expressed reservations.

Energy efficiency as new criterion

Reducing energy consumption by 20% is one of the three important 2020 targets set by the EU alongside a 20% reduction of emissions and a 20% increase in the share of renewables. Unlike the other two targets, though, reducing energy consumption is not binding. Should it be? The Commission is not keen to propose binding targets in its new revised action plan foreseen for the end of the year. Nonetheless, the Commission admits that the objective of a 20% reduction in consumption is far from being achieved. Businesses can thus expect a range of measures aimed at boosting more efficient use of energy. Officials are also keen to push energy audits and supporting mechanisms for companies and SMEs. “Efficiency must become a profitable business in itself, leading to a robust internal market for energy saving techniques and practices and commercial opportunities internationally,” reads a Commission draft, due out in November.

Businesses can also expect to see stricter energy efficiency requirements for buildings and transport. Efficiency could become a criterion for public procurement.