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European Commission

Viviane Reding

Vice-President of the European Commission, EU Justice Commissioner

Justice Council: Making good progress on our Justice for Growth agenda

Justice Council Press Conference /Luxembourg

26 October 2012

Today we had a very constructive Justice Council meeting. I would like to thank the Cypriot Presidency for all their hard work over the past four months in helping to move our 'Justice for Growth' proposals forward. I would like to mention three issues which we discussed today, all of which have a significant potential to boost our economies.

First, on the data protection reform.

The Cypriot Presidency has set out its goals for the remainder of the year and I strongly support their ambitious objectives. We are now at a crucial stage of the negotiations where we are discussing concrete issues and finding solutions to move forward.

A high level of data protection will turn the European Union into an international standard setter that will improve internet governance worldwide. The digital Single Market will also benefit. Only a high level of data protection will generate trust between citizens and private enterprises.

However, we must be very careful how we develop these rules. We must act with the right firmness of touch, tailoring the rules we introduce to the needs of Europe in the 21st century. We do not want rules that place an excessive burden on business – quite the contrary indeed. Nor should our concern with privacy blind us to the need to respect other rights.

I am well aware of these considerations and was glad to be able to discuss how to strike the right balance with the Justice Ministers today. I have listened to Member States' concerns and I have shown openness and proposed solutions on three points.

First, on the question of the possible administrative burden for companies: I have made concrete proposals to reduce this further. One of our main objectives with the Regulation is to greatly simplify the legal environment for EU business and lead to potential savings of around 2.3 billion EUR per year. A single set of rules is good for competitiveness, good for big business, good for SMEs. Our goal is certainly not to impose a bigger burden, and that is why SMEs are already exempt from some requirements, like having a Data Protection Officer. It has never been the Commission's intention to apply the same rules to the small hairdresser as to a multinational;

I have today told Member States that the Commission is prepared to look at whether this SME exemption could be broadened to other areas and that we can also look to add further flexibility through an approach that takes into account the amount and sensitivity of the data processed. But let's be frank: we should not fall into the trap of some lobbyists expressing concerns for SMEs but in fact referring to provisions relevant for large multinational firms.

Second area: the delegated and implementing acts – also known as 'Commission empowerments' - foreseen in the Regulation. The Regulation lays out basic rules and principles, ready to be applied and enforced. Delegated and implementing acts ensure that if, in practice, more specific rules are necessary, they can be adopted without going through a long legislative journey.

This does not mean giving a 'blank cheque' to the Commission. I am open to review the delegated acts one by one, together with the Member States, and to limit them to only what is truly necessary to keep the regulation sufficiently open to future technological developments.

But we need a method based on clear criteria for this review, including the (1) need to avoid fragmentation, (2) the need to supplement rather than amend the regulation and (3) maintaining the technologically neutral character of the law. The application of these criteria could lead to a reduction of the Commission empowerments by up to 40%.

Third, the issue of flexibility for the public sector. At the Informal Council in July, there was a clear consensus among Member States that applying completely different rules for the public and the private sector does not make sense.

The current EU rules – the 1995 Data Protection Directive – does not draw any distinction between rules applicable to the public or the private sector. If we changed this now we risk creating legal uncertainty.

Nevertheless, specific rules for the public sector are necessary in some cases: think for example of a land registry which should be public. I believe we can have more flexibility – but this is something we can achieve within the Regulation. In fact, the Commission's draft already foresees 20 cases in which the rules are adapted for the public sector.

I am prepared to introduce further flexibility in the legislation, provided it does not run against the objectives of achieving a more harmonised legal environment. I believe it should be possible for Member States to adopt laws which further specify how the Regulation is to be applied in specific areas of the public sector.

But one thing is clear: there can be no general exemption for the public sector. We must remember that the fundamental right to data protection applies as much to the public sector as it does to the private – this is what the Treaty tells us.

I thank the Cypriot presidency for maintaining the momentum on the data protection file. Following today's discussion I am confident that we will be able to take a political decision on these three issues in December in order to stick to the ambitious timetable set by our colleague Alan Shatter, the Irish Justice Minister who aims to reach a political agreement on the reform package by the end of the Irish Presidency. It is crucial that we deliver data protection laws that are fit for the 21st century and that we do so without delay.

Another item on the justice for growth agenda are the Commission's recently adopted proposals to fight fraud against the EU budget which I have presented to colleagues today.

Our objective is to protect the EU budget and its potential for boosting growth. But it is also about protecting Member States' budgets, on which the EU budget depends, and protecting taxpayers' money, which funds all our budgets.

More than 90% of the EU's budget is managed by national authorities, for example when they award public procurement grants financed through the EU budget. But unfortunately today, we still witness far too many illegal activities that lead to losses to the EU budget.

Criminals deliberately provide false information to receive EU funding in fields such as agriculture or regional development. Or national officials accept money in return for awarding a public contract, in breach of procurement rules.

These types of criminal behaviour are a cost to the EU budget and to European taxpayers. In 2010 alone Member States reported cases of fraud totalling €600 million. We cannot tolerate that one Euro of taxpayers' money ends up in the pockets of criminals – especially not during these economically challenging times.

Today, criminals simply don't shy away from committing crimes as the risk of being caught and sent to prison is low compared to the gains that can be made. Why is this? Because definitions of offences differ in the Member States (for example 13 Member States do not define bribing officials as a crime in tender procedures); because sanctions differ (in some countries you get a fine, in others you go to prison) and because the time periods for being able to investigate a case differ.

To be more effective in fighting this type of crime we need common rules. We cannot share a common pot and yet take 27 different approaches to protecting money.

Our proposal for EU-wide rules therefore does two things: first, it sets common definitions of fraud throughout the EU, making sure that fraud against the EU budget is considered a crime everywhere in the EU and second, set a minimum level of sanctions, including imprisonment in the most serious cases, in order to deter fraudsters.

Zero tolerance on fraud and other illegal spending needs to be our joint motto. I count on the support of Member States to achieve this.

Finally, we also had a debate on our efforts to tackle insider dealing and market manipulation – the Commission made a proposal to amend the Market abuse directive in July to include interest rate rigging into the criminal offences covered.

Public confidence has gone down with the latest scandals about serious manipulations of lending rates by banks. This is why the Commission made an additional proposal in July to tackle Libor-style market abuse and close any regulatory loopholes. I am pleased to see that Member States are welcoming this proposal.

A swift agreement on the Market Abuse Regulation and the Directive on criminal sanctions against market abuse, which we discussed today, will help restore much needed confidence among the public and investors in this key sector of the economy.

I therefore called on ministers to support the Cypriot Presidency in quickly achieving a political agreement, so that we can complete negotiations with the European Parliament on this directive.

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