Brussels Brief - September 29, 2006
September 29, 2006
Full Printable Version in PDF Format
(Adobe Acrobat Reader required, available for free download here)
KEY DEVELOPMENTS
Competition: EU Council Ends Exemption for Liner Shipping Conferences
Maria Scimemi
The EU Council has repealed Regulation No 4056/86 on the application of the competition rules to maritime transport, with effect from 1 October 2008. On that date the block exemption for liner shipping conferences will come to an end. A liner shipping conference is an association of shipping undertakings which, under the current block exemption, is allowed to set common freight rates, take joint decisions on the limitation of supply, and coordinate timetables. From 1 October 2008, the EU Competition rules will apply in full to all maritime shipping on routes to or from the EU. Thus cabotage and tramp shipping will be affected in addition to liner conferences. To prepare for the transition to the new regime, the Commission will issue Guidelines on the application of the competition rules to maritime transport and an “Issues Paper” which will evaluate the shipping industry’s proposal to replace the block exemption with a new information exchange system.
Energy: Spain Required to Modify New Legislation on Energy Regulation and to Withdraw Orders Concerning E.ON’s bid for Endesa
Patrice Corbiau
In February 2006, the German energy company E.ON launched a bid for the acquisition of the Spanish energy company Endesa. E.ON’s offer competed with another bid for Endesa launched by the Spanish energy company Gas Natural. Following E.ON’s bid for Endesa, the Spanish Council of Ministers adopted new urgent legislation, Royal Decree 4/2006, widening the powers of the Spanish Energy Regulator, CNE. On 16 March 2006, E.ON notified the proposed transaction to the Commission and on 25 April 2006, the Commission decided that the planned operation constituted a concentration with a Community dimension and approved it because it would not significantly impede effective competition in the EU. On 3 May 2006, the Commission started an infringement procedure against Spain, arguing that the Royal-Decree restricts the free movement of capital and right of establishment provided for in the EC Treaty rules. Notwithstanding this infringement procedure, CNE, making use of its new powers granted by the Royal Decree, decided on 27 July 2006 to submit the E.ON/Endesa operation to a number of conditions, including the divestiture of important assets. The Commission has now taken a further step in the infringement procedure by sending a reasoned opinion formally asking Spain to modify the Royal-Decree. In the absence of a satisfactory reply from Spain within two months of receiving the reasoned opinion, the Commission may decide to refer the matter to the European Court of Justice. In addition, the Commission has also decided that the CNE decision breaches the EU Treaty and Merger Regulation and must be withdrawn. The Commission’s decision is based on two factors: First, CNE’s decision was adopted and entered into force without prior communication to, and approval by, the Commission, in violation of the Commission’s exclusive competence under Article 21 of the EU Merger Regulation. Second, CNE subjected E.ON’s acquisition of control over Endesa to a number of conditions that are contrary to EC Treaty rules on free movement of capital and freedom of establishment.
Enlargement: Bulgaria and Romania to Join EU
Alexandra Rogers
Bulgaria and Romania are due to join the EU on 1 January 2007. Although both countries have prepared for membership, further work is required. The Commission’s final monitoring report places rigorous conditions on their entry. Both countries will be closely scrutinised on remaining areas of concern: the justice system, the fight against corruption, organised crime and agriculture. Under the Accession Treaty, there are safeguard measures that can be applied in three policy areas: economic, internal market, and justice and home affairs. These measures, which can be invoked up to three years after accession, could result in food-export bans and cuts to EU funds. Various transitional arrangements have been agreed, including limits on migration. The Commission is also entitled to take remedial measures to ensure the functioning of EU policies in relation to food and air safety, agricultural funds, the judiciary and the fight against corruption.
Mergers: Commission Approves Proposed Merger Between Abertis and Autostrade
Geert Dierickx
The European Commission has cleared the concentration by which Abertis merges with Autostrade. Both companies are mainly active in the management of toll motorway services. The Spanish company Abertis is also indirectly active in car parking and logistic services and in managing service areas on road sites and at airports. Through its holding company Autostrade per l’Italia S.p.A, the Italian company Autostrade holds the concession for the management and maintenance of the Italian toll motorway network. The transaction would create a horizontal overlap on the EU market for toll motorway management services. However, the fact that this was a bidding market, that there were a significant number of other competitors and that third parties did not raise concerns, led the Commission to conclude that the proposed transaction would not give rise to competition concerns.
Competition: Partial Victory for GlaxoSmithKline in Pharmaceutical Pricing Case
Andrea Hamilton
The Court of First Instance (CFI) has partially annulled a 2001 European Commission decision that prohibited certain pricing practices of GlaxoSmithKline’s (GSK) Spanish subsidiary, Glaxo Wellcome (GW). In 1998, GW introduced “General Sales Conditions”, under which GW would sell drugs to Spanish wholesalers at different prices, depending on the end destination of the drugs, in order to limit parallel trade in medicines among EU Member States. The Commission’s 2001 Decision held that the Conditions constitute an agreement restricting competition and were, therefore, prohibited under Article 81 of the EC Treaty. The CFI agreed that the Conditions constitute an agreement, but disagreed that the aim of the agreement was to restrict competition. Moreover, the CFI ruled that the Commission must reconsider whether the Conditions are exempt from EU Competition law under Article 81(3) in light of special characteristics of the pharmaceuticals sector.
Internal Market: Commission Proposes to Clarify the Use of the Sales Description “Veal”
James Arneill
The European Commission has tabled a proposal to clarify the marketing conditions for meat from bovine animals aged twelve months or less. The proposal recommends the establishment of sales descriptions to be used in each Member State, which would be based upon local customs and cultural traditions. In addition there would be a requirement to indicate the age of the animals on slaughter, with animals aged 0-8 months to be described as “veal” and animals aged 8-12 months to be described as “beef”. The proposal follows a public consultation and discussions with interested parties, and aims to improve transparency on the market and to assist consumers in recognising exactly what they are buying. On current EU markets, meat from different production systems, with respect to age of slaughter and type of animal feed, are marketed under the single description of “veal”.
Competition: CFI Judgments in Citric Acid Cartel Case
Mélanie Bruneau
The Court of First Instance (CFI) has confirmed the Commission’s decision in the Citric Acid cartel. In 2001 the Commission fined five producers of citric acid a total of EUR 135.22 million for participating in a secret worldwide cartel between 1991 and 1995, through which they fixed prices and shared the market for citric acid. Two of the five companies, JBL and ADM, challenged the Commission’s decision. They claimed that the CFI should annul the Commission’s decision or alternatively reduce the fine imposed on them, notably on the grounds that the Commission did not adequately establish the impact of the cartel on the market. The CFI has confirmed that the parties had engaged in an illegal price fixing cartel. The CFI has also rejected the argument that the fines were discriminatory and disproportionate, and upheld the fines imposed by the Commission on JBL and ADM.
Competition: CFI Confirms Annulment of Fines Against German Banks
Philip Torbøl
The Court of First Instance (CFI) has confirmed its annulment of a 2001 Commission Decision fining five German banks for fixing currency exchange commissions. In an appeal brought by the banks, the CFI had already annulled the fines in 2004, as the Commission had failed to lodge a defence within the prescribed time limit. The Commission then applied to have this judgment by default set aside pursuant to Article 122(4) of the Rules of Procedure. Upon re-examination of the merits of the case, the CFI found that the Commission had not provided sufficient evidence of the existence of the alleged agreements. It therefore confirmed its annulment of the fines imposed on the companies.
Mergers: Commission Further Investigates Paper Mill Merger
Yannis Virvilis
The European Commission has initiated a second phase investigation into the acquisition by the US-based paper manufacturer Glatfelter, of a paper mill and related assets from the UK company Crompton. Crompton is a manufacturer of wetlaid fibre products, and is the subject of UK insolvency proceedings. The materials it produces are used for products such as tea bags and coffee filters. This case was referred to the European Commission by the German Competition Authority, joined by the UK. The Commission’s initial investigation has shown that given the limited production capacities of other manufacturers in this fringe market, the acquisition might create competition problems by permitting the combined entity to restrict production and increase prices.
NEXT WEEK’S EVENTS
Monday 2 October – Friday 6 October 2006
COUNCIL MEETINGS
Justice and Home Affairs Council (JHA) (5 – 6 October 2006)
COURT OF JUSTICE
Judgments
Community own resources
C-105/02 Commission v Germany
C-377/03 Commission v Belgium
C-378/03 Commission v Belgium
C-275/04 Commission v Belgium
C-312/04 Commission v Netherlands
Competition
C-232/05 Commission v France
Customs union
C-100/05 ASM Lithography
Environment and consumers
C-108/06 Commission v Netherlands
Freedom to provide services
C-452/04 Fidium Finanz
Free movement of goods
C-140/05 Valesko
Justice and Home Affairs
C-241/05 Bot
Regional policy
C-84/04 Commission v Portugal
Social policy
C-17/05 Cadman
C-226/05 Commission v Austria
State aid
C-368/04 Transalpine Ölleitung in Österreich
Taxation
C-475/03 Banca popolare di Cremona
C-290/05 Nádasdi
C-333/05 Németh
Opinions
Approximation of laws
C-356/05 Farrell
External relations
C-173/05 Commission v Italy
Freedom of establishment
C-522/04 Commission v Belgium
Freedom of movement for persons
C-370/05 Festersen
C-208/05 ITC
Free movement of goods
C-110/05 Commission v Italy
COURT OF FIRST INSTANCE
Judgments
Commercial policy
T-300/03 Moser Baer India v Council
Customs union
T-313/04 Hewlett-Packard v Commission
Intellectual property
T-188/04 Freixenet v OHMI (Forme d'une bouteille émerisée noire mate)
T-190/04 Freixenet v OHMI (Forme d'une bouteille émerisée blanche)
T-96/05 Monte di Massima v OHMI - Höfferle Internationale (Valle della Luna)
Law governing the institutions
T-193/04 Tillack v Commission
