EU Commission to conclude US Trade Barriers Regulation Investigation

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

As we have previously reported, the EU Commission is formally investigating the continuing prosecution by the US Department of Justice of EU-based online operators who voluntarily withdrew from the US market following the passage of the UIGEA. The Commission is likely to report on its decision before Christmas, which may result in another WTO dispute against the US.

Since March this year, the EU Commission has been investigating whether the US Department of Justice is in breach of the international Trade Barriers Regulation by continuing to pursue EU online gambling operators which did business in the US prior to the passage of the UIGEA. The investigation is based on a complaint made by the RGA in December 2007. Having sent a delegation to Washington in September, the Commission has suggested that it will report on its conclusions by early December.

As the US has already been found to be in breach of its WTO commitments following the well-publicised complaint by Antigua and Barbuda, it seems likely that the EU will decide that it can best protect the interests of EU businesses by launching a fresh WTO dispute against the US. Unlike Antigua, any threat of trade sanctions against the US by the EU in the event of a favourable WTO ruling would be far more effective, making the possibility of a settlement with the US authorities more likely. Whilst the re-opening of the US market to EU-based operators is too much to hope for in the short term, the industry will hope that any such settlement would at least include certainty for EU-based companies and their executives that they will not be prosecuted in the US for activities prior to the passing of the UIGEA.

In the meantime, the RGA has encouraged the Commission to introduce blocking legislation which would prevent any authorities in the EU from extraditing anyone to the US on pre-UIGEA gambling charges, at least until this TBR complaint is concluded.