Brussels Brief - March 2, 2007
March 2, 2007
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KEY DEVELOPMENTS
Telecommunications: Infringement Proceedings Against Germany Over “Regulatory Holidays” for Deutsche Telekom
Bróna Heenan
The European Commission has fast-tracked its infringement proceedings against Germany over "regulatory holidays" for Deutsche Telekom. Its concern is that newly amended German telecom legislation would effectively exempt Deutsche Telekom AG’s fast internet access network (VDSL) from competition and grant it a “regulatory holiday”. The Commission takes the view that this jeopardises the position of competitors on the German broadband market and also attempts to influence the German telecoms regulator on whether or not competitors should be granted access to the new VDSL network, currently being built by Deutsche Telekom. Under the fast-track infringement proceedings, Germany has 15 days to reply to the Commission’s formal notice, failing which the case will be referred to the Court of Justice.
Internal Market: Takeover Bids Directive Has Not Achieved Expected Results
Elena Kostadinova
The European Commission’s report on the implementation of the Takeover Bids Directive has revealed that the objective of creating efficient EU takeover mechanisms has not been attained. The Directive's key provisions on "board neutrality" and "breakthrough" aim to facilitate EU takeovers by limiting the effect of pre-bid and post-bid takeover defences such as share transfer restrictions and share buybacks. However, Member States can make the application of these rules optional and apply the "reciprocal rule" against a bidder not subject to the “board neutrality” and/or “breakthrough” rules. Member States' use of these options has led to modest or no progress in the EU takeover market.
State Aid: Commission Investigates UK Funding of Royal Mail
Andrea Hamilton
The European Commission has launched an in-depth investigation to determine whether the UK’s funding of Royal Mail violates EC Treaty State aid rules, following complaints from Royal Mail competitors. Royal Mail held a legal monopoly over basic postal services until 2005 and remains the UK’s leading postal services provider in the liberalised market. The Commission’s inquiry targets three loans provided to Royal Mail by the UK totalling nearly EUR 2.7 billion, and an escrow account of EUR 1.2 billion – none of which were notified to the Commission. The Commission will determine whether the funds were provided on terms acceptable to a private investor in a market economy, and so do not constitute State aid, or whether the funds constitute an illegal subsidy. Interested parties will have the opportunity to comment.
State Aid: First Authorisation Under the New R&D&I Framework
Jérôme Cloarec
On 22 February the European Commission authorised a EUR 26.5 million aid package from the French Industrial Innovation Agency for the NeoVal Research & Development programme. This decision is the first taken by the Commission on the basis of the in-depth assessment procedure provided by the new Research & Development & Innovation (R&D&I) Framework. The purpose of the NeoVal programme is to develop a new generation of automatic metro trains and aims to simplify and reduce the cost of existing models. It is also more environmentally-friendly. It brings together Siemens Transportation Systems SAS, LOHR, a French company specialised in freight and passenger transport systems, as well as French State-owned laboratories.
Mergers: Belgian Cable Concentration
Morten Nissen
The European Commission has cleared the proposed acquisition of the Belgian cable operator Telenet by the Dutch cable company Liberty Global Europe, and the closely related acquisition of the Belgian cable operator UPC Belgium by Telenet. As Liberty Global would ultimately control both the acquired companies, the two transactions were considered as one. The Commission investigated the effects of the planned transactions on the Belgian cable TV market both at the retail and wholesale levels but concluded that the proposed transactions would not impede effective competition.
Taxation: Commission Proposes Guidelines to Avoid Transfer Pricing Disputes
Geert Dierickx
Together with the EU Joint Transfer Pricing Forum, the European Commission has drafted guidelines for Advance Pricing Agreements (APAs). APAs are agreements between European tax administrations defining how and where future transactions between related companies in different EU States will be taxed. In such cross-border situations, transfer pricing rules must ensure that the tax base is allocated correctly to the countries where the related companies actually trade. However, the application of national transfer pricing rules causes problems for companies active in different Member States. Therefore, the proposed guidelines will facilitate advance agreements between tax authorities and tax payers and also increase legal certainty.
State Aid: Regulated Electricity Tariffs in Spain
Juan Gutiérrez
The European Commission has initiated a formal second phase investigation into regulated electricity tariffs in Spain. Final consumers in Spain can purchase electricity from the liberalised market and the regulated market. On the regulated market, consumers purchase their electricity only from distributors designated by the State and at tariffs fixed by the State. In 2005, due to high electricity wholesale prices, regulated tariffs were largely below market prices. As a result, the regulated market had a deficit of EUR 3,811 million. In order to finance this deficit, Spain imposed a parafiscal levy on all consumers in Spain for 14 years. The Commission’s preliminary view is that the regulated tariffs were financed at least in part through State resources and provided a selective advantage to certain professional consumers. The same conclusion is drawn as regards the guaranteed profit element for the distributors designated by the State to provide electricity on the regulated market. The Commission doubts that the Spanish regulated tariffs system is compatible with the common market. Interested parties are invited to submit comments. (See Brussels Brief of 2 February 2007).
Monday 5 March – Friday 9 March 2007
COUNCIL MEETINGS
General Affairs and External Relations Council (5 – 6 March 2007)
European Council (8 – 9 March 2007)
COURT OF JUSTICE
Judgments
Agriculture
C-441/05 Roquette Frères
C-45/06 Campina
Customs union
Joined Cases C-447/05, C-448/05 Thomson
C-44/06 Gerlach
Freedom of establishment
C-160/06 Commission v Italy
Freedom to provide services
Joined Cases C-338/04, C-359/04, C-360/04 Placanica
Free movement of capital
C-292/04 Meilicke and Others
Regional policy
C-289/05 Länsstyrelsen i Norrbottens län
Opinions
Agriculture
C-1/06 Bonn Fleisch
Area of Freedom, Security and Justice
C-467/05 Dell'Orto
Common Customs Tariff
C-142/06 Olicom
Freedom to provide services
C-430/05 Ntionik and Pikoulas
Intellectual property
C-334/05 P Office for Harmonisation in the Internal Market v Shaker
Taxation
C-466/03 Albert Reiss Beteiligungsgesellschaft
C-445/05 Haderer
C-434/05 Stichting Regionaal Opleidingen Centrum Noord-Kennemerland v West-Friesland
COURT OF FIRST INSTANCE
Judgments
Intellectual property
T-230/05 Golf USA v OHMI (GOLF USA)
