The EU Parliament agreed on a supply chain law

December 18, 2023 by
Frank Calviño

The European Parliament agreed on a supply chain law, as reported by Spiegel, the German media. As a result, large companies may be sanctioned if, for example, they "benefit from child or forced labor outside the EU."

On their side, larger companies will also have to create a plan to ensure that their business model and strategy are compatible with the Paris Agreement on climate change.

The law also stipulates that companies will be held accountable before European courts if human rights violations occur in their supply chains. The agreement has yet to be confirmed by the Parliament and the Member States.

According to the media quoted above, René Repasi, professor of European law and SPD MEP, has stated that "the law makes German companies liable for breach of their duty of care." Until now, this has been excluded from the German Supply Chain Act. For example, companies could be held liable under civil law, and claims for damages could be asserted.

Trade union politicians and business representatives have criticized the new regulations, as they fear "excessive bureaucracy for companies" and thus "a competitive disadvantage compared to companies from third countries that are not affected by the rules."

Further details regarding the final law are still pending to be released to the public. 

Meanwhile, Amazon wins in the CJEU 

Meanwhile, another important law-related news also comes from the European Courts: Amazon wins. The Court of Justice of the European Union (CJEU) has endorsed the tax aid granted by Luxembourg to Amazon, so the company founded by Jeff Bezos will not have to return 250 million euros claimed by the European Commission as "illegal" tax aid.

In a judgment issued this Thursday, the EU high court has confirmed that, as the General Court (GC) had already determined, the initial decision of the European Commission to force Luxembourg to recover the aid granted to Amazon should be annulled. However, it does so on different criteria. "The Commission did not demonstrate that the tax scheme ('tax ruling') granted to Amazon by Luxembourg was State aid incompatible with the internal market," the CJEU said in a statement.

In 2017, Brussels found that the tax advantages worth around €250 million that Amazon had benefited from in Luxembourg were contrary to EU law because, in its view, the company had been able to pay for several years "considerably less tax without any apparent justification." Specifically, Brussels alleged that Amazon was able to benefit from a tax scheme for eight years (from 2006 to 2014) that allowed it to save paying tax on "almost three-quarters of the profits" earned through its EU sales. Both Amazon and the Luxembourg government challenged the Commission's decision before the Court of Justice.

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