Brussels Brief - March 14, 2008
March 14, 2008
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KEY DEVELOPMENTS
Justice and Home Affairs: UK House of Lords Refuses Extradition for Price Fixing
Andrea Hamilton
In a landmark decision, the UK House of Lords has ruled that Ian Norris, former Chief Executive of Morgan Crucible, may not be extradited to the United States to face price fixing charges. Mr. Norris was implicated in a price fixing cartel for certain carbon products that existed between 1989 and 2000. The House of Lords refused to extradite Mr. Norris because price fixing was not criminalised in the United Kingdom until 2003. Under the US-UK extradition treaty, the United Kingdom is obliged to extradite suspects only if the conduct alleged was illegal in both jurisdictions at the time it took place. While Mr. Norris cannot be extradited for price fixing, the House of Lords ruled that he may still be extradited to the United States to face other charges arising from the US Department of Justice’s cartel investigation, including obstruction of justice.
Competition: Commission Dawn Raids Airlines
Jonathan Aitken
On 11 March 2008, the European Commission carried out unannounced inspections – “dawn raids” – at the offices of a number of international airlines. According to the Commission, it has reason to believe that the airlines concerned, which provide long haul passenger flights "between Europe and a third country", have breached EC competition rules. Further information concerning the identity of the airlines raided has not been released by the Commission, although KLM has confirmed that it was one of the airlines subject to the inspections concerning routes from Europe to Japan. Lufthansa has also confirmed that its Frankfurt offices have been inspected. Both airlines have stated that they are cooperating fully with the Commission’s investigation.
Competition: Fines of EUR 32 Million for Belgian Removal Service Cartel Members
Yannis Virvilis
The European Commission has imposed fines totalling EUR 32.7 million on 11 companies that participated in a cartel in international removals to and from Belgium. The anti-competitive conduct included price fixing, market sharing and bid rigging, and operated for approximately 19 years. According to Competition Commissioner Neelie Kroes, the Commission discovered the cartel on its own initiative. Several companies sought a reduction in their fines pursuant to paragraph 35 of the Commission’s Fining Guidelines invoking their inability to pay. The Commission dismissed all but one of these. In this one exceptional case, the fine was reduced by 70 per cent due to particular circumstances concerning the individual situation of the company, Interdean.
Sport: Advocate General’s Opinion Casts Doubt over Greek Law
Benoît Keane
Advocate General Kokott has issued an Opinion stating that a Greek law, which gives the Greek motor sports federation the right to authorise events in Greece, may be incompatible with European competition law. This case arose when the Greek motor federation, which organises and markets motor racing events, failed to authorise a series of events planned by an independent organiser. The Advocate General considers that the conflict of interest between the Greek federation’s commercial interests and its public duties created a risk of abuse. She considers that such a public role should be carried out by an entity that is subject to adequate checks and balances or has no commercial interest in the sport. However, the Advocate General recognises the right of sporting federations to apply and uphold rules as long as this is done in a non-discriminatory manner. The European Court of Justice will now examine the matter.
Mergers: OMV’s Planned Takeover of MOL Enters Second Phase
Juan Gutiérrez
The European Commission has opened an in-depth investigation into the proposed acquisition of the Hungarian oil and gas company MOL by the Austrian oil and gas group OMV. The proposed acquisition would bring together two strong, integrated oil and gas companies active in several Central and Eastern European countries. The Commission will assess the potential effects of the proposed transaction on the markets for refined oil products as well as natural gas. In particular, the assessment will review the effects in the refined oil product markets on wholesale and retail competition that will result from placing the refineries of the two companies under sole control.
Competition: Spain Infringed EU Law by Not Withdrawing Conditions on E.ON – Endesa Deal
Elena Kostadinova
The European Court of Justice (ECJ) has ruled that Spain failed to fulfil its obligations under EU law by not respecting the European Commission’s decision to withdraw a number of conditions on E.ON’s acquisition of Endesa. In 2006 the Commission approved the acquisition of Spanish energy company Endesa by German company E.ON. The Spanish Energy Regulator and Ministry for Industry, Tourism and Trade, however, imposed a number of conditions on the deal. The Commission subsequently issued two decisions requiring that Spain withdraw these conditions, and in 2007 brought an action before the ECJ. Spain argued that: (i) the action was devoid of purpose because E.ON abandoned the merger in April 2007; and (ii) these measures were adopted in order to ensure the security of energy supplies. The ECJ rejected both arguments because: (i) the Commission’s Reasoned Opinion was published prior to April 2007; and (ii) Spain’s allegations that the Commission’s decisions were unlawful could not be used as a defence in an infringement procedure.
State Aid: Italy Referred to ECJ for Failure to Recover Illegal State Aid
Geert Dierickx
The European Commission has decided to refer Italy to the European Court of Justice (ECJ) for failing to comply with a State aid decision. On 14 December 2004, an Italian aid scheme in the form of tax incentives for companies taking part in trade fairs abroad was found incompatible with EU State aid rules. The Commission therefore ordered Italy to recover the illegal aid from the beneficiaries. Following the Italian recovery injunctions, the aid was partially repaid. However, the outstanding payment injunctions were appealed, resulting in the Italian national courts suspending execution of the injunctions.
Internal Market: EU Bans Sale of Non Child-Resistant and Novelty Cigarette Lighters
Patricia Armesto
On 11 March 2008 the European Commission’s Decision banning the sale of non child-resistant and novelty lighters to consumers entered into force. The Decision requires that common cigarette lighters placed on the EU market are child-resistant. A European standard establishes child-resistance specifications for lighters so those that comply with this standard are presumed to conform to the Decision. The Decision also bans the placing on the market of so-called "novelty lighters" that resemble objects that are especially appealing to children (for example toys, mobile phones, cars, etc) and therefore present a high risk of misuse. These measures aim to reduce the significant number of serious fire accidents involving children that occur every year in the European Union. National Authorities of the EU Member States will now have the responsibility of enforcing the requirements provided by the Decision.
ECJ: Increase in Volume of Community Litigation
Niamh O’Reilly
In 2007, 1,259 cases were brought before the three courts of the European Union – the highest figure ever recorded. 580 cases were brought before the European Court of Justice (ECJ) itself in 2007, an increase of approximately 8 per cent compared with 2006, and for the fourth year in a row there was a reduction in the average duration of proceedings. The number of cases before the Court of First Instance increased significantly from 432 in 2006 to 522 in 2007. Although the first year of the Civil Service Tribunal’s work was largely devoted to the establishment of its internal and external procedures, the Tribunal brought 150 cases to a close in 2007, while 157 new actions were lodged.
Mergers: Acquisition of DoubleClick by Google Cleared by Commission
Mélanie Bruneau
The European Commission has cleared the acquisition of DoubleClick by the internet search engine Google. DoubleClick is a US online advertising technology company that mainly sells worldwide “ad serving”, management and reporting technology to website publishers and to advertisers and agencies. The Commission’s second phase in-depth investigation concluded that the transaction would be unlikely to harm competition. The Commission found that: (i) the elimination of DoubleClick as a potential competitor would not have an adverse impact on competition; and (ii) the merged entity would not have the ability to engage in strategies aimed at marginalising Google's competitors. The Commission has therefore concluded that the transaction would not significantly impede effective competition within the European Economic Area.
NEXT WEEK’S EVENTS
Monday 17 March – Friday 21 March 2008
COUNCIL MEETINGS
Agriculture and Fisheries Council (17 March 2008)
COURT OF JUSTICE
Judicial vacation of the Court of Justice from 17 March to 30 March 2008 inclusive.
COURT OF FIRST INSTANCE
Judicial vacation of the Court of First Instance from 17 March to 30 March 2008 inclusive.
