What companies have to consider while running a business in the EU

 

Running a business requires you to adhere to all kinds of national rules and legislation. If you happen to run your business in the EU, you also have to consider certain EU directives and regulations. Let’s take a look at some of the most important EU rules that may affect your business!

 

 

Corporate Sustainability Due Diligence Directive (CSDDD)

Directive (EU) 2024/1760 on corporate sustainability due diligence (CSDDD) tasks companies with a corporate due diligence duty to identify, prevent, stop, mitigate and account for negative environmental and human rights consequences of their own actions, as well as those of their subsidiaries and value chains.

 

 

Illustration of a global supply chain

 

 

Larger companies have an additional requirement to ensure that their business strategies align to limit global warming to 1.5 °C, as defined by the Paris Agreement.

 

Directors of companies based in the EU are responsible for creating the due diligence processes and supervising their implementation in the company’s daily operations.

 

 

Which companies are affected by the CSDDD

The corporate due diligence requirement is not obligatory for all companies active in the EU. In fact, many small businesses are exempt from it, as the legislation only applies to companies with over 1000 employees and exceeding a global net 450 million euro turnover.

 

Regarding high-impact sectors like textile, agriculture, food and extraction of minerals, the thresholds are a little lower. In these sectors, companies with over 250 employees and a net 40 million euro turnover are bound by the new rules.

 

| The CSDDD only applies to companies exceeding a global net € 450 million turnover

 

 

Penalties for non-compliance

EU member states are responsible for implementing and overseeing the CSDDD. In addition, the European Commission will set up a European Network of Supervisory Authorities to facilitate coordination on a European level.

 

Companies not adhering to the rules face a penalty of up to 5% of their global turnover, as well as a public naming-and-shaming process where the names of rule-breaking companies are published.

 

 

The control of supply chains

The EU is not wrong to make companies responsible for their supply chains. After all, a lot can go wrong during a product’s journey from a bunch of raw materials to a finished and packaged item waiting for its end-user.

 

For example, manufacturers can demonstrate a liberal attitude towards your patents and hand them out to unauthorised parties, leading to copyright-infringement and a loss of revenue for you.

 

 

Illustration of a patent

 

 

Similarly, various quantities of your products can get deliberately misdirected towards unauthorised marketplaces, resulting in price-eroding grey markets that damage your legitimate distribution chain.

 

However, although controlling your supply chain is very important (especially now when not doing it comes with heavy fines and public shaming), it’s certainly not an easy task, even for larger corporations. You need to devote a significant amount of time and resources to this purpose, including specialised expertise most companies simply don’t possess.

 

Luckily, this is a field where online brand protection can lend you a hand.

  

 

Supply chain control with online brand protection

Supply chain control starts with truly knowing who your business partners are. Unfortunately, this may prove to be more difficult than it sounds, especially if some of your business partners are halfway around the world.

 

| Supply chain control starts with truly knowing who your business partners are

 

This is where our effective, global compliance checks come in handy. We run thorough background checks to learn as much about your business partners’ behaviour and professional actions as possible.

 

For this purpose, we employ a mixture of versatile methods, from software-based monitoring to on-site background checks in various locations. In each case, we adopt our methods to the current situation, which means you’ll get a perfectly tailored solution to meet your exact needs.

 

Once we’ve gathered the data, you’ll receive a comprehensive report with actionable advice and court-admissible documentation (e.g. in case of online findings, a time-stamped screenshot created by our software screenseal).

 

All in all, supply chain monitoring is a necessary but quite difficult task that could be obligatory for your brand. Don’t worry about how you’re going to manage it; instead, reach out to us and let’s create a supply chain monitoring system perfectly tailored to your brand’s needs.

 

 

Related Topics:

New product safety regulations in the EU

 

Improved accessibility requirements for online platforms in the EU

 

The EU questions AliExpress about product safety

 

 

Tax transparency for marketplaces

Council Directive (EU) 2021/514 aims to ensure tax transparency in the EU, which means that sellers active on online platforms will not be able to hide behind country borders and “forget” to pay sales taxes after their revenue earned in a member state other than their own.

 

To reach this end, the new directive creates an obligation for online marketplaces to provide a report to local tax authorities about transactions that occurred on their platform. In order to make the information package complete, online marketplaces have to contain personal and/or business data of sellers whose transactions are featured in the report. This includes name, date of birth, business address, tax ID, etc.

 

 

Image of the European Commission’s Berlaymont building in Brussels

 

 

Exempted from this are sellers with fewer than 30 transactions, or a sales value of less than 2000 euros per year.

 

Marketplaces are also required to validate data received from their sellers. If a seller doesn’t provide sufficient data, the marketplace is obligated to suspend their account until the matter is rectified. The ultimate penalty for continued non-compliance is the closure of a seller’s account.

 

| Marketplaces are required to validate data received from their sellers

 

Reports have to be filed with the local tax authority, and not the country where the online marketplace is registered in. The first report is due on 1 January 2024. Once the data is in, it’s the responsibility of each EU member state to exchange necessary tax information with each other.

 

The directive creates a level playing field for all sellers in all countries and helps national tax authorities get a clear picture of the real revenue of certain taxpayers. And, whether intentional or not, the information submitted in these reports helps something else too: your brand’s IP rights.

 

 

Tax transparency from an online brand protection point of view

Information is power, especially when it comes to online sellers who try to hide behind the relative anonymity of e-Commerce. Several marketplaces, including Wish and AliExpress don’t display a lot of information about their sellers, which often enables fraudsters to get away scot-free when infringing on your brand’s IP rights and endangering consumers.

 

 

Screenshot of a random seller’s shop information on wish.com

 

 

Luckily, legislators all over the globe, especially the EU and the US have caught on to this practice and try to create fairer conditions for consumers, which also benefits your IP rights.

 

The information online marketplaces have to gather, including the seller’s business name, tax number and contact information, is exactly what we need in order to discover who is behind an infringing product listing. Previously, marketplaces were able to claim they didn’t know anything about their sellers, but now, thanks to the new legislation, this won’t be acceptable. At least not in the EU.

 

Therefore, online brand protection experts at globaleyez welcome the new directive as it enables us to provide even faster services to our clients.

 

 

The Digital Markets Act

Regulation (EU) 2022/1925, or the Digital Markets Act (DMA) aims to curb the unfair practices of some tech giants (referred to as “gatekeepers” in the text) on the digital markets. This in turn will ensure a fairer competition, and consumers can enjoy a larger selection of digital service providers to choose from.

 

 

Gatekeepers, open the gates

Tech giants like Facebook and Google have the upper hand when it comes to independent apps running on their platforms. Not only does this prevent new actors from entering or reaching significant growth on the market, but it also puts consumers at a great disadvantage.

 

The DMA aims to put a stop to this practice. With the new legislation in force, tech giants will have to stop giving preferential treatment to their own products and allow independent providers better access to their platforms. For e-Commerce, this suggests the end of Amazon’s preferential treatment of its own product listings and services.

 

Take a look at the intricacies of the highly competitive seller’s market on Amazon

 

This also means that should they wish to do so, smaller messaging services like Signal will be able to work with larger competitors like WhatsApp or Facebook Messenger to allow users to send messages between these platforms.

 

Another great news for brands is the easier access to sales transaction data on e-Commerce platforms. This information will give a huge boost to your targeting efforts - and take away the unfair competition advantage of the e-Commerce platform hosting your listings.

 

 

A person looking at data charts on a tablet

 

 

In addition, tech users will have greater freedom in deleting pre-installed apps on their devices (bye-bye useless undeletable apps), freely choose their preferred browsers, virtual assistants and search engines, and can even stop “paying with their data”.

  

 

Who are the gatekeepers

The DMA provides a clear definition about which platforms are affected by it. According to the text, gatekeepers are companies that

• “have had an annual turnover of at least €7.5 billion within the EU in the past three years or have a market valuation of at least €75 billion;
• have at least 45 million monthly end users and at least 10 000 business users established in the EU;
• control one or more core platform services, i.e. marketplaces and app stores, search engines, social networking, cloud services, etc. in at least three member states.”

 

Smaller companies are generally exempt from being a gatekeepers, except in special cases where a platform may become one, and is thus deemed to be an “emerging gatekeeper” by the European Commission.

 

This means that today, roughly 10-15 companies fall within the gatekeeper category, including Google, Apple, Facebook and Amazon.

 

Should a tech giant not adhere to the DMA, the Commission may impose fines up to 10% of the company’s global turnover. This rises to 20% in case of repeated incidents, and even a ban on acquiring new companies in serious cases.

 

| Should a tech giant not adhere to the DMA, the Commission may impose fines of up to 10% of the company’s global turnover

 

 

A new e-Commerce shaped by the DMA

The rules set forth by the DMA significantly change the landscape of e-Commerce, at least in Europe. However, a lot depends on how tech giants react and whether they really adjust their behaviour, or if they simply find a new way to put themselves ahead of the competition.

 

 

Meta’s encounter with the DMA

The European Commission has accused Meta, the parent company of Facebook and Instagram, of violating EU competition rules. The controversy centres on Meta's "Pay for Privacy" model, which offers users a choice between paying for an ad-free experience or accepting personalised ads. The Commission argues that this limits users' control over their data and breaches the Digital Markets Act, which aims to ensure fair competition and user privacy. Meta could face fines of up to €12.5 billion if found guilty.

 

Meta defends its practices, claiming compliance with existing laws and expressing a willingness to engage in further dialogue with the Commission. This case underscores the ongoing tension between regulatory bodies and tech giants over data privacy and market fairness. The outcome of this conflict will be leading the way for future decisions in this sector.

 

The Commission now conducts an in-depth investigation that’s supposed to come to a conclusion in the first quarter of 2025. If Meta is found to be in breach of the DMA, the company may face fines of up to 10% of its global turnover.

 

As proven by this example, e-Commerce can become a more even playing field for everyone involved, resulting in great advantages for both brands and customers.

 

Unfortunately, this goes for fraudsters as well. While the self-promotion and gatekeeping many tech giants do definitely harm competition, they also keep fraudsters in check, at least to some extent. After all, we can safely assume that companies like these wouldn’t knowingly distribute IP-infringing products, and it’s usually third-party sellers that hurt brands’ trademark rights on e-Commerce platforms.

 

However, with competition becoming fairer, we can also expect counterfeiters, grey market sellers and other IP-infringing fraudsters to get a better chance at finding customers. But you don’t have to accept this as an inevitable situation for your brand.

 

 

Online brand protection at your service

globaleyez’s trademark protection services do not correlate with the level of competition in a marketplace. This means that regardless of how the DMA changes the face of e-Commerce in the EU, our services will be just as effective as they are today.

 

However, they’ll probably be more essential than ever.

 

Our marketplace monitoring service, for instance, detects IP-infringing listings on over 150 marketplaces worldwide. Fast and effective software-based searches combined with decades of expertise quickly discover potentially infringing listings, and extensive filters ensure the separation of harmless listings from fraudulent ones.

 

Social media monitoring does the same on social media platforms, with the added bonus of detecting other types of infringing content in ads, brand pages, closed buying groups and much more.

 

Incidentally, social media monitoring is also a great addition to our marketplace monitoring because operators of IP-infringing marketplace accounts we encounter on marketplaces tend to use social media platforms as an additional and cheap traffic source (either towards their listings or towards possible webshops or standalone websites). By detecting these connections, we can find out as much as possible about the sellers, if you want us to.

 

Once we establish that a listing or other type of content is indeed infringing on your IP rights, we can enforce your rights and ensure its timely removal from the marketplace or social media platform.

 

 

Conclusion

Business owners have to know and understand all kinds of legislation that apply to their company, which creates an additional burden on top of all their daily tasks. This is true for the protection of your invaluable IP assets as well.

 

Let us take some of that from your shoulders. globaleyez will look after your IP rights so you can concentrate on your core tasks. Contact us and let us know how we can assist you!