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Europe Offers U.S. a Deal, Hoping for Global Rules on Airline Emissions

September 5, 2013 by

BRUSSELS — Seeking to end years of acrimony, the European Union has made concessions to the United States to try to gain support for global rules on airline emissions.

Under the arrangement, the European Union would pare back its regulations, applying them only to its own airspace. The original plan, which the United States and other countries rejected, would have imposed charges for emissions over an airline’s entire route if the flight began or ended in Europe.

In exchange, Europe is pushing for a global deal on aviation emissions.

The European concessions — proposed quietly over the summer and made public this week — aim to end a trans-Atlantic dispute over a European law to curb emissions on major international routes. In doing so, the European Union is looking to present a united front with the Americans and press the rest of the world to adopt similar or more extensive controls.

“This is a multilateral negotiation where you give and take,” Isaac Valero-Ladrón, a spokesman for the European Commission, said in a statement. “We should not miss the bigger picture: a global deal means more emissions covered in the long term.”

The European law, which came into force on Jan. 1, 2012, covers emissions from most flights that touch down in, or take off from, European airports, obliging foreign airlines to buy some carbon permits from traders and governments. Airlines face fines of 100 euros, or $131, for each excess ton of carbon dioxide emissions that they fail to offset with permits. Repeated breaches can even lead to a ban from European airports.

So far, the rules have been applied only to flights within Europe, and European carriers and most non-European airlines have complied. The program is supposed to be expanded next year to include international flights in and out of Europe.

Despite the proposed concessions, a global deal is still a long shot. The United States and other countries have supported the arrangement, according to European Union diplomats. But emerging nations like China and India are resisting similar levels of regulation, which could make it difficult to develop global standards.

From the start, the aviation emissions law approved by European Union nations in 2008 has generated intense opposition among foreign governments, which say the rules violate their sovereignty and unfairly raise the costs of airlines from developing countries.

Carriers like China Eastern Airlines and Air India have refused to participate in the system, and they face the prospect of fines for not providing emissions data. Airbus, the European aircraft manufacturer, warned that Chinese carriers had halted some aircraft orders to signal their dissatisfaction with the European law.

Last year, President Obama signed the European Union Emissions Trading Scheme Prohibition Act. The law could exempt carriers like American Airlines and Delta Air Lines from making payments.

Amid the outcry, Connie Hedegaard, the European Union climate commissioner, announced late last year that she would “stop the clock” on the system for 12 months, relieving airlines of making the first payments, which would have been due in April 2013. Those payments were expected to be modest. But the airlines balked because they could face big bills in coming years as the number of permits they needed to buy potentially rose.

Now, the European Union is putting forth a compromise.

Under the compromise, countries could regulate, for now, “the portion of those flights within the airspace of that state or group of states,” according to a copy of a working paper. But the paper also calls for a global set of regulations by 2016, and for that system to be carried out “from 2020 as part of a basket of measures which also include technologies, operational improvements and sustainable alternative fuels.”

On Wednesday, the International Civil Aviation Organization, a United Nations group based in Montreal, agreed to forward the European compromise proposal to a meeting of its general assembly that will start this month. The group is examining ways to regulate pollution from aircraft engines, which account for about 3 percent of greenhouse gas emissions.

European officials said paring back their system in exchange for a global deal would represent a better outcome. Under the new proposal, emissions would be reduced 37 percent by 2050 from 2005 levels, compared with just 20 percent under the original plan.

But some environmentalists said they had doubts about the value of the compromise.

“Timing is everything when it comes to global warming because of the cumulative effect of CO2 emissions,” said Bill Hemmings, an aviation expert at Transport and Environment, an environmental group based in Brussels. “So why would we give up on a law that is already cutting aviation emissions when it is very uncertain what the climate will get in return?”

Anthony Concil, a spokesman for the International Air Transport Association, an industry group representing the world’s major carriers, declined to comment on Europe’s new proposal. Instead, Mr. Concil encouraged nations at the International Civil Aviation Organization meeting to “achieve a global agreement” allowing airlines to offset their carbon emissions and avoid “a patchwork of uncoordinated measures.”

Article source: http://www.nytimes.com/2013/09/06/business/global/europe-offers-compromise-to-us-on-airline-emissions.html?partner=rss&emc=rss

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Raw Data: Effort to End E.U. Roaming Fees Gains Momentum

August 5, 2013 by

When she announced in May her desire to ban the unpopular fees, which travelers pay in the 28-nation European Union outside their home countries, Neelie Kroes, the European commissioner responsible for telecommunications, was greeted with skepticism. And with less than 11 months left before the European Parliament’s legislative session ends June 30, some observers in Brussels thought Mrs. Kroes had run out of time.

But while most of official Brussels is on vacation, Mrs. Kroes and her staff appear to be edging closer to a deal that could abolish the fees, which make up an estimated 5 percent of operators’ sales — but a bigger chunk of profits.

According to a copy of the draft regulation Mrs. Kroes has circulated among members of the European Commission and which has been obtained by the International Herald Tribune, operators would get an incentive to lower roaming rates to the level of domestic calling fees.

The incentive would be a big one: an exemption from a law passed last year, also initiated by Mrs. Kroes, that will give E.U. consumers the option of buying roaming service from any operator on the Continent, not just their own, meaning the local operator could lose a customer who is out of the country altogether if it does not lower the rates.

The draft regulation would remove this right for consumers whose operators joined an alliance of carriers offering pan-European mobile phone roaming service at the same prices that consumers would pay if they did not leave home.

Some operators have objected, arguing that they should not be coerced to lower the fees, which are currently capped by retail price controls that expire at the end of June 2017. The current caps limit roaming charges to €0.24, or $0.32, per minute for a voice call, €0.07 per minute to receive a call, €0.08 to send a text message, and €0.45 for every downloaded megabyte of data.

One person with knowledge of the industry’s lobbying position on the issue, who did not want to be identified because negotiations were at a delicate stage, said some operators were concerned that E.U. consumers would be free to buy low-cost roaming service, a form of “arbitrage” that could lead to the elimination of the fees altogether.

But that is precisely the goal of Mrs. Kroes and a growing number of lawmakers in the European Parliament, who view the fees as a hurdle to broad adoption of mobile broadband.

A new study to be released this month by Nielsen on behalf of Syniverse, a seller of roaming software and services to 900 mobile operators, including Telefónica and Vodafone in Europe, confirmed that the fees were still an obstacle — despite price caps and text messages warning consumers that they were racking up charges.

In a survey of 13,000 consumers in 13 European countries obtained by the International Herald Tribune, the study found that on average 56 percent of cellphone users either limited the use of mobile Internet or turned off the roaming function on their devices entirely while traveling within the European Union.

Danielle Jacobs, chairwoman of the International Telecommunications Users Group, an association in Driebergen, the Netherlands, that represents telecommunications user groups in Europe, South America and Asia, said Europe’s system of roaming fees was slowing the adoption of cloud-based mobile services, especially those used by business travelers. “Intug would be very happy with the abolishment of roaming fees in Europe,” Mrs. Jacobs, who is also the chairwoman of the Belgian users’ group, Beltug, said in an interview. “The uncertainty about mobile data roaming prices and the possible bill shocks are putting the brakes on using more mobile applications.”

Mrs. Kroes’s push to eliminate the fees faces hurdles. The European Parliament must support her plan, as must the Council of Ministers, which comprises representatives of each member state and is where telecommunications companies exert greater influence because they are large employers.

Pressure for change is building in Brussels. On July 9, members of the Parliament’s Industry, Research and Energy committee voted unanimously to end roaming fees by July 2015. The full Parliament is scheduled to take up the issue in September, when Mrs. Kroes is also expected to present details of her plan to lawmakers.

One lawmaker, Paul Rübig, who was a sponsor of the original roaming price controls that took effect in 2007, said that the momentum to end roaming fees had reached a critical intensity in Brussels.

With elections for the European Parliament scheduled for May, Mr. Rübig, a representative from Wels, Austria, said lawmakers were well aware of the possible political gain from banning the unpopular fees. According to Mr. Rübig, a survey this year of voter attitudes before the E.U. election showed that the top issue for Austrian voters — more important than basic freedoms and other civil rights — was the abolition of roaming fees in the European Union.

The survey conducted by the Austrian government found a level of support for ending fees that Mr. Rübig said was common across the bloc.

“The pressure to end roaming fees in the upcoming session will be enormous,” Mr. Rübig said in an interview. “The days of roaming fees are definitely numbered.”

Mary Clark, a vice president at Syniverse, based in Tampa, Florida, has followed the issue closely in Europe because it is central to her company’s business.

She said that whether lawmakers voted to ban roaming fees outright next year or forced operators to eliminate the fees to retain their customers, change was coming.

“The end result is, we are going to get to an environment where the home pricing is the same as roaming pricing from a retail point of view,” Ms. Clark said.

Article source: http://www.nytimes.com/2013/08/06/technology/effort-to-end-eu-roaming-fees-gains-momentum.html?partner=rss&emc=rss

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Political Economy: Returning Some Powers to E.U. Members

July 21, 2013 by Leave a Comment

The European Union is facing a crisis of legitimacy. This is evidenced in a decline in support for the E.U. among citizens in pretty much every member country. The most extreme expression is in Britain, where pressure is mounting to quit the E.U.

There are two main schools of thought about how to restore trust in Brussels. One is to increase the direct say citizens have over what the European Commission does — say by giving yet more power to the European Parliament or by having a directly elected European Commission president. The other is to stop Brussels from interfering in things best left to nation-states.

The former school of thought is based on a misconception. The E.U. does not have a demos, or common people: few Europeans feel European rather than Italian, German, French or whatever. Witness the low turnout for European Parliament elections. Trying to construct a democracy without demos is artificial and will not solve the legitimacy problem.

The better option is to decentralize decision-making to nations. That would move power closer to the people.

This is the thinking behind the Dutch government’s recent call for an E.U. based on the principle of “European where necessary, national where possible.” It concluded that the time of an “ever closer union,” a key phrase in the E.U. treaty, in every possible policy area is over. The U.K. government’s review of the commission’s “competences” — a word for its powers, not for whether it is discharging them competently — is motivated by a similar desire.

The question, then, is how to bring about decentralization. A popular demand by many British Conservatives is to repatriate competences from Brussels to London. Britain already has opt-outs from the single currency, banking union and home affairs matters. Some other countries also have opt-outs.

The snag is that it is one thing to secure an opt-out when a new power is being transferred to Brussels; quite another to get it back. This is because a country can veto losing a power but any other country can veto its return. What is more, if countries could cherry-pick which bits of E.U. law they wanted to follow, the union could unravel. Even the Dutch are not calling for opt-outs.

Some senior British Conservatives are, therefore, no longer pushing hard for unilateral repatriation of competences. William Hague, the foreign minister, said last week that Britain should try to reform the Union for the benefit of all, not just for Britain.

How, though, to achieve this? Part of the answer is to realize that decisions can be decentralized even without shifting competences away from Brussels.

The E.U. treaty already contains two relevant principles. One is “subsidiarity”: the idea that decisions should be taken at the most decentralized level of government consistent with effective action. The second is “proportionality”: the idea that E.U. legislation should be the minimum required to achieve a particular goal.

If these two principles were properly followed, there would be far less concern about Brussels’ meddling in things that are none of its business — for example, its attempt this year to ban olive oil jugs in restaurants. Fortunately, it backed down after an outcry.

The snag is that subsidiarity and proportionality are highly subjective, said José de Areilza, law professor at Spain’s Esade university. It is, therefore, extremely hard to use them to bring a successful court action against E.U. institutions for overstepping their authority.

That does not mean, however, that the politicians and bureaucrats could not themselves agree to decentralize decisions where possible. This year, for example, the E.U. altered its fisheries policy to give some power back to countries.

But this will not always succeed, because both the commission and the European Pariament have an incentive to accumulate power at the E.U. level. Further action should, therefore, be taken to breathe life into the subsidiarity and proportionality principles.

One idea could be to tighten up their definitions so governments could bring actions against E.U. institutions if they meddled in things they should avoid — though some experts, like Mr. Areilza, think the concepts will always be too slippery to use for legal purposes.

Another idea, favored by Open Europe, the British research organization, is to institute a system of “red cards,” giving national parliaments the ability to strike down commission proposals on the grounds that they contravene subsidiarity or proportionality. There is already a “yellow card” under which the commission has to reconsider a proposal if at least a third of national parliaments object.

A variation on the theme would be to give parliaments the ability to force the commission to review existing legislation, not just new rules. Of course, it might still be impossible to repeal laws if the European Parliament refused to play along. But, if enough national parliaments objected, their greater legitimacy might force the issue.

Breathing life into subsidiarity and proportionality would not be a complete solution to the Union’s legitimacy problem. Something special needs to be done to give countries that do not use the single currency confidence that the euro zone will not discriminate against them by acting as a bloc. The commission itself needs to be more effective at disciplining fraud and ensuring that governments stick to the rules of the game once they are agreed. Unless there is serious change on these lines, the peoples of Europe could well become increasingly disgruntled with the European project.

Hugo Dixon is editor at large of Reuters News.

Article source: http://www.nytimes.com/2013/07/22/business/global/returning-some-powers-to-eu-members.html?partner=rss&emc=rss

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European Union Offers Berlin Compromise on Bank Proposal

July 12, 2013 by Leave a Comment

Speaking in London, Michel Barnier, the European Union’s commissioner overseeing financial services, said there was “room for maneuver in the negotiation,” and tried to head off criticism from Germany that the European Commission, the executive arm of the 28-nation bloc, was using the proposal to make a power grab.

“I don’t have any ideology in the issue,” Mr. Barnier said. “It’s not that the Commission wants to have a big role in the resolution process — if someone would find and suggest to us a better solution we would be happy to look at it.”

The resolution fund is one pillar of the proposed banking union that policy makers see as an important part of the response to the financial crisis that has gripped the euro zone.

One question, Mr. Barnier said, was, “Should we be treating banks that are purely regional and have no cross-border activities in exactly the same way as big international banks?”

“That’s something that we can maybe look at further in the course of negotiations,” he added. Germany, whose approval will be needed for the resolution mechanism, has more than 400 local savings banks, which are economically and politically important.

Under Mr. Barnier’s plans, outlined Wednesday, the European Central Bank would signal when a lender in the euro zone, or in a country participating in the banking union, was in severe financial difficulties. With representatives of national authorities, the E.C.B. and the Commission, a board would undertake preparatory work before the Commission would then decide whether and when to place a bank into resolution.

That idea provoked immediate opposition from Berlin, and more evidence of discord in Germany surfaced Friday in a letter to Mr. Barnier from Finance Minister Wolfgang Schäuble. “The proposal published by the Commission regrettably envisages too high a degree of centralization with regard to the boundaries” of the existing E.U. law, the letter said, according to Reuters.

“The proposal does not match the current legal, political and economic realities and would create major risks,” Mr. Schäuble wrote, adding that the transfer of powers to the Commission was not backed by E.U. treaties.

Mr. Barnier disputed that, arguing that his proposal was the best solution available without changing E.U. treaties. He said that if the treaties were amended, the European Stability Mechanism, the euro zone’s permanent bailout fund, might take over the power to decide when to wind down banks.

One E.U. official, speaking on condition of anonymity owing to the sensitivity of the issue, said that agreement with national governments on the resolution fund was possible by the end of the year — but conceded that changes would likely be made. Most officials expect the role of the Commission to be pared back, but for legal reasons there are few alternative bodies that could make the decision to wind down a bank, they say.

In his speech in London on Friday, Mr. Barnier also warned against any effort by Britain to win special exemptions from E.U. single market rules for its financial services sector, the City of London.

“By definition,” he said, “there can’t be two single markets: one for financial services and one for the rest of the economy. One for the City, and one for the rest of the E.U.

“Repatriating full policy responsibility for financial services would mean leaving the single market as a whole and de facto the E.U.,” Mr. Barnier said, adding: “I believe the U.K. would lose out on many of its own interests if it chose that path.”

Prime Minister David Cameron has promised to renegotiate British ties with the European Union and some lawmakers from his Conservative party have called for new powers that would prevent Britain being outvoted on any new legislation on financial services.

But Mr. Barnier rejected that idea.

“It would not work,” he said. “If you give a veto to one country you have to give it to others and then we no longer have an internal market,” he said. “Our interest is in having a coherent single market with intelligent rules that apply everywhere.”

Article source: http://www.nytimes.com/2013/07/13/business/global/eu-offers-berlin-compromise-on-bank-union.html?partner=rss&emc=rss

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Europe Has Plan for Failed Banks, but Germany Isn’t Convinced

July 9, 2013 by Leave a Comment

But Germany’s skepticism about giving authority to a group overseen by the European Commission, as well as other concerns, could bog the proposal down in months of rancorous negotiations.

On Wednesday, Michel Barnier, the commissioner overseeing financial services, is expected to call for consolidating decisions under a group supported by around 300 staff members and creating a pool of money funded by mandatory levies on banks. The system, which was described ahead of the formal announcement, would rely on the European Central Bank to signal when a financial institution in the euro area was facing severe difficulties.

A resolution board to be made up of representatives from the central bank, the European Commission and member states of the union would then make a recommendation, as necessary, on how to shut down or shrink a bank. The commission, the union’s policy-making arm in Brussels, would reserve the right to make a final decision.

The board also could draw on the shared fund to help shut down or radically restructure failing lenders after creditors and shareholders have borne some losses. European Union officials want the size of the fund to be as much as 70 billion euros when it is fully funded by 2025.

Giving the commission the power to close banks “is arguably the greatest transfer of sovereignty in the history of the E.U. and points toward a fiscal, as well as economic and monetary, union,” said Alexandria Carr, a lawyer with the firm Mayer Brown in London.

But on Tuesday, Wolfgang Schäuble, the German finance minister, told the European Commission “to be very careful” with its proposal for a single authority because “otherwise, we will risk major turbulence.”

“We have to stick to the legal basis we have. Otherwise, we will fail and we will create new uncertainty in markets,” Mr. Schäuble said to other European finance ministers as they held their monthly meeting.

Mr. Schäuble insisted, as he has before, that treaties governing the European Union need to be changed before the plan to centralize decision making for failing banks — the so-called Single Resolution Mechanism — goes fully into force. Because treaty changes would be laborious and far from certain, Mr. Schäuble is arguing for a potentially long delay to the banking effort.

But France called for swift adoption of the plan.

“We clearly want an agreement,” said the French finance minister, Pierre Moscovici. That agreement should be reached “by the end of the year,” he said.

Even as Germany sought to apply the brakes on a broad banking initiative, European Union finance ministers on Tuesday gave Latvia the formal go-ahead to use euro notes and coins in January 2014 by setting the conversion rate at 0.70 lats to 1 euro.

“We trust in Europe and we trust the euro,” Latvia’s finance minister, Andris Vilks, told a news conference.

That celebratory language contrasts with the hesitancy shown by Germany toward new banking efforts that many experts say are vital to ensuring the long-term survival of the euro.

After months of wrangling, the European Union decided late last year to create a single overseer under the European Central Bank that would directly supervise about 150 of the bloc’s biggest banks. The purpose of the Single Resolution Mechanism — and the rule book for dealing with troubled banks that was negotiated two weeks ago — is to prevent the costs of bank collapses from affecting taxpayers and states.

Such crises can quickly descend into a government debt crisis, as happened in Spain and in Ireland. Bank failures can also threaten the stability of the euro area when states can no longer afford the sky-high government borrowing costs that often come with bailing out their banks.

The plan for the Single Resolution Mechanism, as well as the proposal for the single rule book, would still need the approval the European Parliament.

Article source: http://www.nytimes.com/2013/07/10/business/global/europe-has-plan-for-failed-banks-but-germany-isnt-convinced.html?partner=rss&emc=rss

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European Union Makes Surprise Deal on Budget

June 27, 2013 by Leave a Comment

BRUSSELS — The European Union may soon have a new budget — including the first cut to spending in its history — after a surprise breakthrough deal on Thursday.

The European Commission president, José Manuel Barroso, announced agreement on a seven-year, 960 billion euro, or $1.27 trillion, budget after early morning talks with the president of the European Parliament and other officials from E.U. member states.

Mr. Barroso said the deal included more flexibility than earlier versions.

The budget still needs final approval by the European Parliament, but that is looking more likely thanks to this agreement. The European Parliament president, Martin Schulz, called the deal “acceptable” and said he was optimistic that he would have a majority of Parliament members backing it at a vote next week.

The budget includes the first cut to spending in European Union history at a time when many of the bloc’s countries are in recession and struggling to reduce their national debt. The budget sets what the bloc of nations can spend on programs ranging from infrastructure and farming to development aid and employment measures.

The 27 European Union countries have been trying since last autumn to cobble together a budget for the years 2014-2020. The talks were difficult because some countries wanted to increase or maintain spending levels while others insisted it made no sense to increase the budget while individual governments were imposing tough austerity policies.

E.U. leaders agreed to an overall package in February, but the European Parliament asked for more spending and more say in the way the budget would be handled.

Ireland’s prime minister, Enda Kenny, championed the latest agreement. Ireland had been hoping to crown its six-month presidency of the European Union, which ends Sunday, with a comprehensive budget agreement.

“I think it is very significant,” Mr. Kenny told reporters in Brussels alongside Mr. Barroso and Mr. Schulz. Noting that there was “a lot of doubt” at the beginning of the year “about whether compromise could be negotiated” between the E.U. member states and Parliament, he added, “We have now succeeded in doing that.”

Separate from national spending, the budget is designed in part to balance out the economic development of its members by giving funding to poorer countries. The European Union has funded thousands of infrastructure and capital projects over the years, from the installation of broadband networks to the upgrade of road networks.

The budget also includes items meant to generate economic growth, like research and development and a new, more accurate satellite navigation system. It also funds regulation and administration in such areas as mergers and competition, the review of national budgets to ensure they do not include excessive deficits, and banking supervision.

If the European Union fails to get a seven-year deal passed by Parliament before the end of the year, the bloc would have to revert to annual budgets, which would make long-term planning difficult.

Article source: http://www.nytimes.com/2013/06/28/business/global/european-union-makes-surprise-deal-on-budget.html?partner=rss&emc=rss

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Europe Nears Antitrust Deal With Google Over Web Searches

April 25, 2013 by Leave a Comment

The announcement by the European Commission that it had begun what is called market testing was intended to determine whether the remedies address complaints that Google favors its own products in search results.

The step is also a sign that Google, having already avoided antitrust charges in the United States, has offered concessions that are acceptable to the commission, thus allowing it to dodge a guilty verdict and a huge fine in the case.

“Now we have concrete proposals on the table which meet the necessary standards for us to submit to the public and to seek feedback on,” said Antoine Colombani, a spokesman for the E.U. competition commissioner, Joaquín Almunia.

The market testing would last for one month and a final settlement — which both sides have been working toward since shortly after the formal start of the case in November 2010 — could be agreed upon after the summer “in a best case scenario,” Mr. Colombani said.

Google still could face a fine of as much as 10 percent of its global annual sales, which were nearly $50 billion last year, if it fails to keep its promises. But the deal would allow Google to escape the type of lengthy and expensive antitrust battles that Microsoft faced in Europe over its media player and server software.

Even before it reached a deal with the commission, Google came under pressure to make further concessions. A prominent consumer group and groups with links to Microsoft condemned Google for failing to make sufficient changes, and some companies asked for a longer period of market testing.

There were also complaints that the new rules would only apply to Google’s national domains because Google users in Europe can also use the company’s global Web site that ends in .com rather than, say, .fr for France.

Google is “serving ads to European customers on the Google.com Web site, which is a strong indication that the remedies should apply to that Web site as well,” said David H. Wood, the legal counsel for Icomp, an industry group backed by Microsoft. “Circumvention is just one click away.”

The .com site has a 7 percent market share in the European Economic Area, which comprises the 27 countries of the Union as well as Iceland, Liechtenstein and Norway, and does not offer the same quality of service for European users, according to E.U. officials, who were referring to information that was supplied to them by Google.

Asked whether the current offer by Google was final, Al Verney, a spokesman for the company, said only that “we continue to work cooperatively with the commission.”

One of the centerpieces of Google’s offer to settle the case is to show links to the Web sites of competitors who offer specialized search services.

In cases where Google sells advertising next to results for specific industries like restaurants and hotels, Google would provide a menu of at least three options for non-Google search services.

The menu plan is analogous to a system Microsoft agreed to in 2009, offering users of its Windows software in Europe a ballot screen enabling them to download other Web browser software and to turn off Microsoft’s browser, Internet Explorer. Last month, the commission fined Microsoft $732 million for lapses in adhering to that settlement.

Google would use computer code to identify the most relevant rival services for a particular query. The code would then select three of those sites to be included in the menu.

Google would also label results pointing to its own services — like Google Maps, if they display local businesses — as Google properties and separate them from general search results with a box, though they would still appear in the normal list of results. The boxes would be mandatory, and probably heavily outlined, in cases where Google makes money from advertising that appears with the search results.

Claire Cain Miller contributed reporting from San Francisco.

Article source: http://www.nytimes.com/2013/04/26/technology/26iht-google26.html?partner=rss&emc=rss

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E.U. Regulators Move Forward on Google Settlement

April 25, 2013 by Leave a Comment

The decision by the European Commission to gather reaction to Google’s proposal is intended to address complaints from competitors concerned that Google favors its own results over theirs. By announcing Thursday the start of market testing of the planned changes, the commission allows others in the industry to weigh in.

The commission said it needed to intervene because “Google has had a strong position in Web search in most European countries for a number of years now” and because it “does not seem likely that another Web search service will replace it as European users’ Web search service of choice.”

The details of the agreement were reported earlier this month, as Google for the first time agreed to the legally binding changes to its search results after a two-year antitrust investigation by European regulators, likely allowing the company to avoid fines and a formal finding of wrongdoing.

The market testing of the changes would last for one month and a final settlement could be agreed upon after the summer, according to Antoine Colombani, a spokesman for the E.U. competition commissioner, Joaquín Almunia.

The agreement would be legally binding for five years, and a third party would ensure compliance. If the deal is accepted, Google would avoid a fine and a finding of wrongdoing. But it could face a fine of as much as 10 percent of its global annual sales if it failed to keep its promises. Google did not issue any immediate comment.

The deal would allow Google to escape the type of lengthy and expensive antitrust battles that Microsoft faced in Europe over its media player and server software.

The European Commission has taken a tougher line with Google on the issue of how it runs its search rankings than has the U.S. Federal Trade Commission. In January, the U.S. commission decided, after a 19-month inquiry, that Google had not broken antitrust laws.

About 86 percent of all online searches in Europe are conducted using Google, according to the Web analyst comScore. In the United States, it has about two-thirds of the market.

One of the centerpieces of Google’s offer is to show links from competitors who offer specialized search services. In cases where Google sells advertising next to results for particular vertical markets like restaurants and hotels, Google would provide a menu of at least three options for non-Google search services.

That plan is analogous to a system Microsoft agreed to in 2009, offering users of newly purchased computers in Europe a ballot screen enabling them to download other Web-browser software from the Internet and to turn off Microsoft’s browser, Internet Explorer. Last month, the commission fined Microsoft $732 million for lapses in adhering to that settlement.

Google would also label results pointing to its own services — like YouTube — as Google properties and separate them from general search results with a box. The boxes would be mandatory, and probably heavily outlined, in cases where Google makes money from advertising that appears with the search results.

Google also would mark results from its own services like weather or news where it does not collect money from advertising. Those frames could be boxes with a lighter outline.

In areas in which all search results are paid ads, like shopping, Google will auction links to rivals.

Google is pledging to restrict the way it integrates content from other sites and media into its own products. It would need “to offer all specialized search web sites that focus on product search or local search the option to mark certain categories of information in such a way that such information is not indexed or used by Google,” the commission said in its statement.

Claire Cain Miller contributed reporting.

Article source: http://www.nytimes.com/2013/04/26/technology/26iht-google26.html?partner=rss&emc=rss

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I.M.F. and Europe Set Tough Terms for Cyprus Bailout

April 3, 2013 by Leave a Comment

The other €9 billion, or $11.6 billion, of the bailout money is to come from the other 16 euro zone countries whose approval of the terms of the bailout deal are still required.

“This is a challenging program that will require great efforts from the Cypriot population,” Christine Lagarde, the managing director of the I.M.F., said in a statement issued by the fund, which is based in Washington.

The I.M.F.’s commitment follows completion of a memorandum of understanding the organization has drafted with Cyprus and the other two international organizations involved in the bailout, the European Central Bank and the European Commission.

Though it has not yet been made public, officials say the document catalogs budget cuts, the privatization of state-owned assets and other conditions Cyprus must meet to receive its periodic allotments of bailout money, amounting to €10 billion.

The agreement is another strong dose of medicine for Cypriots, who last month agreed to restructure an outsize banking sector by forcing huge losses on bondholders and big depositors in the country’s two biggest lenders.

Officials from the Cypriot government, which still needs its Parliament’s approval of the terms of the memorandum, sought to put a positive spin on the deal.

“This is an important development which brings a long period of uncertainty to an end,” Christos Stylianides, a spokesman for the Cypriot government, said in a statement made available Wednesday.

The bailout agreement “should have taken place a lot sooner, under more favorable political and financial circumstances,” said Mr. Stylianides, who was apparently referring to infighting in Cyprus about responsibility for the debacle.

Even before the bailout deal, the Cypriot economy was expected to shrink 3.5 percent this year with unemployment hitting nearly 14 percent. Now, under the strict bailout measures, some experts predict the economy could contract 5 percent or more this year, sending unemployment even higher.

The memorandum will not be made public before euro zone governments review it, Olivier Bailly, a spokesman for the European Commission, said at a news conference on Wednesday. Euro finance ministers will hold an informal meeting next week in Dublin, where they might give their backing, Mr. Bailly said.

Full legal approval, though, is expected only after the Parliaments in some euro area countries like Finland and Germany, which are helping to pay €9 billion toward the package for Cyprus, vote on the deal.

If those approvals are completed by the end of month, Mr. Bailly said, Cyprus could receive its first aid payment in May.

The Cypriot authorities on Tuesday described elements of the agreement that they saw as favorable.

Mr. Stylianides, the Cypriot spokesman, said the deal safeguarded important parts of the economy by keeping potentially valuable deposits of natural gas in offshore waters under Cypriot jurisdiction, and by winning two more years, until 2018, to hit deficit targets and carry out privatizations.

Mr. Stylianides also said the government saved the jobs of contract teachers and of 500 civil servants, and had overcome demands by the international lenders to tax dividends.

But the memorandum could be hotly contested by the Cypriot Parliament, where many lawmakers have criticized crisis measures that already have been taken, like capital controls — tight restrictions on transfers and withdrawals of money — that threaten to make a bleak economic outlook even worse.

In a change partly aimed at easing those tensions, the government in Nicosia on Tuesday appointed a new finance minister, Harris Georgiades, to replace Michalis Sarris, who resigned. Mr. Sarris has been criticized at home and abroad for his handling of the crisis.

Mr. Georgiades, who had been the deputy finance minister, said Wednesday that capital controls would be lifted “gradually” and that the country would meet all of its bailout targets.

Article source: http://www.nytimes.com/2013/04/04/business/global/imf-to-contribute-1-billion-euros-to-cyprus-bailout.html?partner=rss&emc=rss

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Off the Charts: In the Developed World, Economic Growth Contracts

February 22, 2013 by Leave a Comment

The Organization for Economic Cooperation and Development, a group of 34 countries, said this week that the combined gross domestic product of its members declined at an annual rate of 0.6 percent in the final three months of 2012. It was a sign of just how far the global economy has weakened since 2010, when it appeared that the recovery was gathering strength.

The estimate was preliminary, since not all countries have released figures for the quarter and those that have will be revising them. The United States, which reported a small decline of 0.1 percent in the quarter, is expected to revise that to show a small gain when it reports new figures next Thursday.

It is unusual for downturns to be so widespread that they produce declines in the combined economies of the O.E.C.D. countries, which include all the major developed nations. Since 1962, when the O.E.C.D. statistics were first released, there have been only 13 quarters when that happened. The first three were in 1974 and 1975, during the worldwide recession brought on by the shock of soaring oil prices. There were four more in the early 1980s, during the double-dip American recession, one in 2001 and four in 2008 and 2009, during the credit crisis.

On Friday, the European Commission issued a glum forecast, saying the 27 countries in the European Union would see economic growth this year of just 0.1 percent, while the euro zone economies would shrink by 0.3 percent. If the O.E.C.D. estimates are correct, each of those forecasts would represent an improvement from 2012. During the four quarters of 2012, the O.E.C.D. estimated, the economies of the entire European Union declined by 0.6 percent, while the euro zone economies were down 0.9 percent.

The accompanying charts show the contribution from each of three sectors to the economies of the O.E.C.D. and four major parts of it — the United States, the euro zone, Britain and Japan — since 2006. Those sectors are private consumption, government consumption and gross investment. The charts show movements in each area over 12-month periods ending in the quarter shown.

The recent weakness is unusual in that there has been no countercyclical support from governments in many of the countries when the economy weakened. The euro zone never had a 12-month period when all three sectors shown were negative — until the periods ending in the first three quarters of 2012. (Fourth-quarter numbers are not yet available for the sectors.)

The United States economy has been doing better than many others over the last year, and the charts show why. A major reason is that fixed capital investment is still rising at a decent clip in this country — measured by comparing the fourth quarter of 2012 to the same quarter of the previous year — while it is down in Japan, Britain and the euro zone.

That gain is caused entirely by the private sector, which may have benefited from a banking system that did a better job of recapitalizing in 2010 than banks in Europe did, and thus is able to finance more projects.

Government investment in the United States has been declining for more than two years.

Historically, it has been very unusual for government consumption to decline, but that has become common in many countries, including the United States. During the first decade of this century, there was not a single quarter where such consumption was lower in the United States or the euro zone than it had been a year earlier. But since then, that has become the norm, not the exception, in both regions. In the United States, federal, state and local government budgets have been squeezed, while in Europe, austerity has become the byword in many countries.

Interestingly, while the British government has proclaimed a policy of austerity, government consumption over the last year has grown faster than private consumption while capital investment has fallen.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://www.nytimes.com/2013/02/23/business/in-the-developed-world-economic-growth-contracts.html?partner=rss&emc=rss

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