Juncker’s “Last Chance Commission”: Key Policy Considerations Regarding the Newly Appointed European Commission

January 7, 2015

On the 10 December, the new European Commission took its oath of independence before the European Court of Justice. This new, more politicised Commission marks the beginning of what can only be described as an ambitious project to overhaul the European Union’s executive body and tackle the European Union’s big political and economic challenges head on.

On 10 December 2014, Jean-Claude Juncker, the President of the European Commission (the "Commission"), together with his College of Commissioners, took a solemn oath before the European Court of Justice to carry out their responsibilities in complete independence and in the general interests of the European Union. President Juncker and his team of twenty-seven other Commissioners received approval from the newly elected European Parliament in fall 2014 and took office on 1 November 2014. The new Commission’s mandate will run until 31 October 2019.

Juncker’s Team & His Five Year Plan

Juncker’s College is markedly different to that of previous Commission Presidents’, in terms of structure, experience and age of the Commissioners, the assignment of portfolios, etc. Junker has publicly termed his Commission the "Last Chance Commission", as the team is set apart by the number of "Spitzenkandidaten" — a German term to describe highly qualified candidates. In this respect, the new Commission has much stronger credentials than its predecessor: of the twenty-eight Commissioners, four are former Prime Ministers (including Juncker), five were Deputy Prime Ministers, seven are returning Commissioners and 8 are former Members of the European Parliament. Juncker’s team also has more new faces than under previous mandates (under Barroso there were 14 returning Commissioners) and is younger (the average age is 51.7), yet more experienced.

Juncker’s Priorities 

President Juncker’s political priorities are underpinned by the need to reinvigorate EU Member State economies. His Commission will be responsible for programs and measures designed to, among other things: 

• boost jobs, growth, investment and competitiveness;
• foster a connected digital single market;
• create a resilient energy union and a forward looking climate change policy; and
• strengthen a deeper, fairer Internal Market and Economic & Monetary Union.

Beyond these immediate economic strategies, the European institutions and policymaking more generally are intended to become more efficient, centralised and coherent. To this end, Juncker has created a new coordination role for a number of Commissioners, who will act as "Vice Presidents."

A Two-Tier Commission: The New Collaborative Way of Working

Juncker has created a two-tier Commission, with Vice-Presidents ("VP"s) on the one hand, and "normal" Commissioners on the other. There are seven VPs in total, four of whom are directly tasked with fulfilling President Juncker’s key policy priorities. These new VPs, unlike "normal" Commissioners, do not have their own "Directorate General" (team of civil servants) but will lead "project teams", steering and coordinating the work of various Commissioners with related portfolios. The "project teams" mirror the political guidelines set out by President Juncker and as such will not be static, but are expected to fluctuate over time, according to needs and the development of new projects. Different Commissioners will be able to contribute to varying projects and, in some cases, to several projects. This new way of working aims to "move away from static structures and break down silos." A high-degree of inter-dependence has been created by the tiers: each "normal" Commissioner will require the support of a VP to bring forward a new initiative and each VP will rely on contributions from his or her "Project Commissioner(s)" before completing a project. All Commission proposals will also be subject to Frans Timmermans’ (VP for Better Regulation) overarching power of veto. 

Project Teams Led by VPs 

The Project Teams will be led by the VPs within "well-defined projects": 

• VP Jyrki Katainen will coordinate Jobs, Growth, Investment and Competitiveness. The former Finnish Prime Minister’s task will be to promote competition, investment and jobs and to mobilise more than €300 billion in public and private investment.                                                                                                                
• VP Andrus Ansip will head up Digital Single Market. The former Estonian Prime Minister’s principal duty will be to foster a "connected Digital Single Market" to spur €250 billion of additional growth in the EU during the next five years. In order to achieve this, Ansip will "break down national silos in telecoms regulation, copyright, and data protection and in the management of radio waves." 
• VP Maroš Šefčovič will lead the Energy Union. The former Slovak EU Commissioner for Inter-Institutional Relations will promote "resilient Energy Union" through the diversification of energy sources and the reduction of high-energy dependency of certain Member States. Energy efficiency and renewables will also be on his agenda. 
• VP Valdis Dombrovskis will coordinate Euro and Social Dialogue. The former Latvian Prime Minister will steer the EU’s 2015 economic governance package, as well as initiatives designed to strengthen the convergence of economies, tax and labour policies throughout the Eurozone. 

Key Agendas for Individual Commissioners 

Beyond the VPs, Juncker has assigned some of the most historically powerful Commission portfolios to individuals from the smaller or newer Member States, such as Competition (Denmark), Trade (Sweden) and the Internal Market (Poland). These Commissioners are also expected to have more direct access to Juncker during their term.  

1.       Competition Policy — Margrethe Vestager (Denmark) 

Margrethe Vestager, Denmark’s former Minister of Economic Affairs and an experienced economist, will work closely with the VP responsible for Jobs, Growth, Investment and Competitiveness and (where appropriate) with the VPs responsible for Digital Single Market and Energy Union. Vestager’s task will be a difficult one, as the necessity to co-operate with other Commissioners (especially those responsible for the digital, telecommunications, energy and financial services portfolios) will challenge her independence, while her enhanced collaborative role will emphasise the rising influence of competition law in many economic spheres. Vestager will need to address specific issues in network industries, such as EU energy market fragmentation and mobile telephony consolidation. The financial services sector will also be high up on her agenda: a sector which faces continued scrutiny, exemplified by the Interbank Offered Rate benchmark cases, the on-going investigation into the Credit Derivatives market, and the State aid investigations into the corporate tax arrangements granted by Ireland, Luxemburg, and the Netherlands (including those which allegedly benefit a number of prominent US multinational companies). The on-going investigations into abuse of dominance online, such as in relation to search, will also very much be at the forefront of her agenda. Vestager has also vowed not to bow to protectionist pressure and stressed the need for strong deterrence, advocating the imposition of high fines, where appropriate, regardless of a company’s national roots.  

2.       Trade Policy — Cecilia Malmström (Sweden) 

Swedish Cecilia Malmström’s challenge will be to boost Eurozone growth through improved market access. EU trade relations remain tense, as was highlighted by both the recent solar panel and anti-dumping cases. Although the EU succeeded in convincing China in 2012 to commence negotiations on an Investment Treaty, the process remains drawn out. The upcoming reassessment in 2016 of China’s market economy status will in all likelihood lead to further tensions. A more pressing matter will be the "Transatlantic Trade and Investment Partnership" ("TTIP") negotiations with the United States, which are becoming more and more politicised. Malström must also address two agreements currently embroiled in domestic politics (Thailand and Malaysia), while a third agreement with Indonesia seems, at least for now, a long way off. Since the EU has exclusive competence in trade matters, Commissioner Malmström will be responsible for representing the EU within the WTO and in other International fora; while at the same time developing a strong foreign direct investment policy and evaluating the EU’s trade defence instruments and strengthening its strategic partnership with Africa. 

3.       Internal Market, Industry, Entrepreneurships & SMEs — Bieńkowska (Poland) 

Elżbieta Bieńkowska, former Deputy Prime Minister of Poland, is the Commissioner for the newly entitled "Internal Market, Industry, Entrepreneurships & SMEs". This portfolio is part of a project team of six VPs: the VP of Better Regulation and Inter-institutional Affairs; the VP of Budget & Human Resources; the VP for Energy Union; the VP for Jobs, Growth, Investment and Competitiveness; the VP for Euro & Social Dialogues; and the VP for Digital Single Market. Her responsibilities include: renewing the strategy for the completion of the single market for goods and services; bringing industry weight in the EU’s GDP back to 20% by 2020 (today it hovers at less than 16%); improving the business environment and easing access to markets and to finance; identifying new sources for jobs and growth; and achieving appropriate regulatory conditions for the development of space applications and services in Europe.  

Although for the first time Internal Market’s title explicitly encompasses SMEs, it has lost what were arguably its most important competences in relation to financial services. There remains much debate about how this will evolve in practice; given that under the previous mandate, Internal Market was responsible for a number of reforms to EU financial services regulation, many of which still require implementation. Under this re-structuring, what was arguably one of the Commission’s most successful portfolios has been dismantled, with its financial services competences being transferred to a new, stand-alone specialised portfolio.   

4.       Financial Stability, Financial Services and Capital Markets Union — Lord Hill (UK) 

Commissioner Jonathan Hill, the former leader of the Tories in the UK House of Lords, will face several challenges. A newly created, stand-alone financial services portfolio in the hands of a conservative Brit is something of a controversy, given the need to defend EU legislation in an economically sensitive sector where the UK is often at odds with EU policy. By allocating this portfolio to the UK, President Juncker seems keen to defuse some of the tensions between the UK and the Commission on key financial reforms.  

Hill will be working closely with the VP for the Euro & Social Dialogue and with the VP for Jobs, Growth, Investment & Competition. Initiatives falling under his new portfolio are subject to on-going negotiations, including: benchmarks, shadow banking, long-term investment funds and a financial transaction tax. In addition, Hill will need to draft some one hundred secondary measures to implement legislation already agreed upon during the previous mandate. He will also need to strike a balance between differing Member State views on structural separation in the banking sector. Further, he will be responsible for resolving a number of on-going disputes with major trading partners (such as the US) regarding the apparent inconsistencies in financial regulation between various jurisdictions. 

5.      The Energy Agenda — Cañete (Spain) 

The main challenge in energy policy will be to balance the costs and benefits of moving towards a low-carbon, internal energy market. Spain’s Miguel Cañete has announced specific legislative initiatives intended to complete the reform of the Emission Trading Scheme ("ETS") and to impose obligations on the non-ETS sector (for example, transport services). Cañete will naturally work closely with the VP for Energy Union.  

The new Commissioner intends to conduct a review of the Directives on Energy Performance of Buildings, Eco-design and Renewable Energy and will also be responsible for climate change policy (previously a stand-alone portfolio). Most recently, energy security has become a cornerstone of the Commission’s energy policy and following the degradation in the political rapport between the EU and Russia, Member States, particularly those along the Eastern borders, have been putting pressure on the EU to foster an "Energy Union". 

6.      The Digital Economy & Society Agenda — Oettinger (Germany)

The importance of the Digital Agenda (the EU’s strategy to support digital technologies in delivering sustainable economic growth by 2020) is expected to increase in importance, influencing other policy areas at an EU level. Data protection, IT infrastructure and copyright will represent some of the principal challenges for Germany’s returning Commissioner, Günther Oettinger. Although his predecessor, Neelie Kroes, largely refrained from interfering with competition policy, it remains unclear how Oettinger intends to interact with Vestager’s portfolio. During his time as Commissioner for Energy, under the previous Commission mandate, Oettinger was an outspoken critic of Europe’s dominant search engine. He even went as far as to propose the extension of copyright levies to the latter when it provides links to copyrighted material. Oettinger’s challenge will be to achieve the harmonisation of rules governing the use and enforcement of copyright, in order to guarantee equal protection for rights holders throughout the EU, while ensuring cultural content remains accessible to citizens.   

Oettinger will also have traditional telecommunications responsibilities and will work closely with the VP for the Digital Single Market. He is charged with continuing a consumer-oriented policy in the telecommunications area, the basis of which will be the realignment and passage of the 2013 Connected Continent "legislative package." This package provides for: the prohibition of roaming charges; greater co-ordination of spectrum use; and the availability of standardised fixed access products. The Commissioner has already announced plans to remove national barriers within the EU and to facilitate the emergence of European champions in the telecommunications and IT sectors, as well as promoting the financing of start-ups. These goals might run into major hurdles due to the lack of key EU interoperability standards and a lack of harmonised implementation for EU regulation, prompted in part by the fragmentation of the market because of differing national legislation, spectrum valuations and availability. 

Will the New Commission Model Succeed? 

This new Commission faces a daunting task and new economic and political challenges, as a result of the recession and the rise of parties who are not well-disposed to the idea of a "United States of Europe". The new structure and direction is striking in a number of respects: 

First, the appointment of several senior figures from "new" or "smaller" Member States as Commissioners suggests that President Juncker is seeking a new distribution of power, thereby diminishing the institutional dominance of Commissioners from the largest Member States. It is also a strategic move, insofar as the "European" credentials of some of the smaller Member States, including those along eastern borders, have at times been questioned. 

Second, the choice of certain Commissioners to handle political "hot potato" portfolios which are sensitive in their home Member State is a high risk strategy in terms of effective EU decision-making. Such Commissioners, insofar as they hope to retain political careers in their home Member State, might be severely compromised in pursuing policies at loggerheads with their national interests. 

Third, the newly established "soft hierarchy" between the Commissioners might lead to more complex and less obvious power struggles, ultimately generating new inefficiencies. It was hardly the case in practice that vertical silos of decision-making were without their own problems in terms of efficient decision-making. Under the new structure, characterised by shifting teams and collective responsibility, stakeholders may find it much more difficult to identify the Commissioner responsible for their area of interests, thereby rendering the system less amenable to constructive influence by stakeholders and therefore less accountable.  

Fourth, having several Commissioners responsible for the same task may also create situations where no one takes responsibility for policymaking, thereby stalling European decision-making and rendering European policymaking more complex and opaque. That said, the new way of working will no doubt encourage more inter-service communication, which could go some way to prevent Commissioners seeking to take decisions which are not necessarily supported by their peers.  

Fifth, it might seem less than obvious why the Commission is embarking upon such an overtly "industrial policy" agenda at the very time when many Member States are questioning the scope of the Commission’s legitimate powers. Absent the success of that agenda, it is arguable that the Commission might find itself even more vulnerable politically in the eyes of Member State public opinion.

Sixth, the apparent "democratic deficit" under which the Commission labours raises a fundamental question as to whether the Commission can or should pursue policies expressly designed to create European "champions", rather than following its traditional classic neo-liberal line, leaving certain types of policymaking to the Council and European Parliament.  Nonetheless, given the European Parliament’s increased influence over the appointment of the Commission, it is quite possible that we will see fewer public parliamentary challenges to Commission proposals and more coherence between the EU’s legislator and executive during the course of the next five years. This may go some way, in Juncker’s own words, to bring "European citizens closer to Europe."  

© 2015 Gibson, Dunn & Crutcher LLP

Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.