Economic and legal commission (ECO)

Brief description and main aims: 

The Covid-19 pandemic caused significant disruptions to global supply chains, with several contractors experiencing delays in the delivery of products. The ongoing war in Ukraine has further strained the supply of certain raw materials (e.g., steel) in Europe and price increases for construction materials are being observed across all EU Member States

At the same time, a sharp hike in energy prices has also been observed across the EU since 2021. Several factors have contributed to this rise in prices, such as the unprecedented increase in gas prices on the global markets, the increased demand for liquefied national gas, or Russia’s unilateral decision to stop gas supplies to several EU countries. Energy-intensive industries including steel, concrete and cement tend to pass on the impact of higher prices to contractors.

Why FIEC is dealing with this topic: 

Several contractors in Europe are having serious difficulties coping with rising prices and supply shortages for energy and certain construction materials, with many at risk of not being able to fulfil contractual obligations.

Sustained high energy and raw material costs have a negative impact on production levels, potentially slowing down construction works. In the field of public procurement, many companies refrain from participating in new tenders. To add to the problem, in several Member States, contracts do not take into sufficient account prices increases and clients continue to enforce completion deadlines.

FIEC has repeatedly been raising awareness to the impact of supply chain disruptions and price increases for contractors across Europe. It has also called for measures to be taken at the national and EU-level to mitigate adverse impacts on the sector, especially in the field of public procurement. Public contracts should be adapted accordingly and should include adequate price revision mechanisms for ongoing contracts and adjustment clauses to the completion deadlines. 

Brief description and main aims: 

In May 2021, the European Commission published a proposal for Regulation on Distortive Foreign Subsidies in the EU Single Market aimed at tackling the distortive effects of foreign subsidies in the EU Single Market. The proposal will also fill a legislative gap as, currently, there is no EU instrument to control subsidies granted by third countries. It is expected that the Regulation will be adopted in November 2022.

Under the proposed Regulation, the Commission will have the power to investigate financial contributions granted by public authorities of a non-EU country which benefit companies engaging in an economic activity in the EU and redress their distortive effects, as relevant. The Regulation proposes the introduction of three tools, two notification-based and a general market investigation tool. This includes a notification-based tool to investigate bids in public procurements involving a financial contribution by a non-EU government, where the estimated value of the procurement is €250 million or more. 

Why FIEC is dealing with this topic: 

FIEC treats this issue in cooperation with the European International Contractors (EIC) and the European Dredging Association (EuDA). Efforts are now focused on providing the EC information substantiating a reasonable suspicion of foreign subsidies in a particular market segment, justifying a market investigation (under Art. 34). 

In the last years, an increasing number of public infrastructure projects have been awarded to third country State-owned enterprises (SOEs), particularly from China, submitting extremely low prices against which private European companies cannot compete. A pattern of distortive subsidies is suspected in these cases.  As such, it is important to look at the possibilities for action the Regulation offers that could potentially help restore a level playing field in the EU Single Market. 

Brief description and main aims: 

In February 2022, the European Commission adopted its proposal for a Directive on Corporate Sustainability Due Diligence (CSDD) which aims to foster sustainable and responsible corporate behaviour throughout global value chains. Under the new rules, companies will have to identify, prevent, or put an end to potential or actual negative human rights and environmental impacts resulting from their activities. 

The new due diligence rules will apply to certain company's own operations, their subsidiaries in the sense of a ‘controlled undertaking’ as well as to direct and indirect “established business relationships” in their value chains. Only companies that meet defined thresholds will come directly under the scope of the due diligence rules. SMEs therefore do not directly fall within the Directive’s scope. 

Why FIEC is dealing with this topic: 

FIEC deals with this issue together with European International Contractors (EIC). Contractors across Europe are still sensing the repercussions of the Covid-19 pandemic and are now confronted with the impact of a war in Ukraine on their supply chains. Therefore, there is a need to ensure that the ruleset for CSDD is manageable and does not lead to additional cost burden for European businesses.

As such, while FIEC and EIC support the introduction of a harmonized EU legal framework for CSDD, they call upon the EU legislator to limit corporate responsibility to companies’ own operations and direct business partners. Furthermore, the corresponding obligations must provide a level playing field between EU and non-EU construction companies whilst avoiding disproportional obligations for SMEs.