Brussels Brief - June 3, 2005
June 3, 2005
Full Printable Version in PDF Format
(Adobe Acrobat Reader required, available for free download here)
KEY DEVELOPMENTS
Competition: ECJ Denies Jurisdiction to Respond to the Greek Competition Commission on the Parallel Trade of Pharmaceuticals Case
Yannis Virvilis
In an unglorious end to the famous referral case by the Greek Competition Commission (GCC) concerning parallel trade in pharmaceuticals, the European Court of Justice (ECJ) has ruled that it has no jurisdiction to answer the questions referred by the GCC. According to the ECJ, the GCC is not a “court or tribunal” within the meaning of Article 234 of the European Community (EC) Treaty – the provision that enables national courts or tribunals to refer questions to the ECJ for a preliminary ruling. The ECJ found that the GCC does not have the necessary characteristics for it to be classified as a court or tribunal. As for the substance, the question that the GCC had posed was whether, and in what circumstances, a dominant pharmaceutical company (GlaxoSmithKline) can, in order to restrict parallel trade in its products, refuse to meet in full orders placed by wholesalers. It has to be recalled that the Advocate General in his opinion adopted most of the arguments of the pharmaceutical industry, by ruling that restricting the supply of pharmaceutical products does not per se constitute an abuse of a dominant position. The European Commission had been hoping for guidance from the ECJ on how to apply Article 82 of the EC Treaty in the area of pharmaceuticals. It had intervened in the ECJ proceedings arguing that the refusal of GlaxoSmithKline to supply its Greek wholesalers with the aim of preventing parallel trade constituted an infringement of Article 82.
Trade: Airbus/Boeing Subsidy Disputes back at WTO
Philip Torbøl
Both the European Union (EU) and the United States have resumed their World Trade Organisation (WTO) cases against each other over their respective aid to Airbus and Boeing. After having warned that additional subsidies to Airbus would trigger renewed action before the WTO, the US Government decided that negotiations, in any event, would not resolve the dispute efficiently. While maintaining that negotiation would be the better way to proceed, the EU has immediately responded with a counteraction. Both actions had already been initiated before the WTO in October 2004, but were put on hold by the parties in an attempt to reach a mutual agreement. The US Government claims that Airbus, which has taken over Boeing’s leading position in the aircraft market, receives illegal loans from EU Member States. The EU action concentrates on alleged indirect government aid to Boeing through defence research contracts in addition to tax subsidies.
Mergers: Commission Approves the Acquisition of Hexal by Novartis, Subject to Conditions
Mélanie Bruneau
The European Commission has cleared the proposed acquisition by Novartis of Hexal and its US sister company Eon Labs. Novartis is a Swiss pharmaceuticals company while Hexal is a German producer of generic medicines. This transaction will create the largest European producer of generics. Initially, the Commission considered that the transaction would give rise to serious competition concerns in the three following markets: prescription calcitonins used for treating osteoporosis in Poland, over-the-counter anti-rheumatics in Germany and prescription anti-gout preparations in Denmark. In order to remove these doubts, the Commission’s clearance was subject to a number of conditions. Novartis has undertaken to divest itself of certain Hexal product groups in three EU Member States: Calcihexal in Poland, Diclac in Germany and Apurin in Denmark. The Commission considers that these commitments were appropriate to remedy the competition concerns.
State Aid: New French Scheme of Tax Breaks for Takeovers of Ailing Industrial Firms Approved by the Commission
Mélanie Bruneau
The European Commission has approved the new French scheme for takeovers of ailing industrial firms. This scheme encourages the creation of jobs in connection with such takeovers. Indeed, the scheme provides for aid towards job creation where an ailing industrial firm is taken over by a new firm. This aid takes the form of reductions in corporation, trade and property taxes. In addition, the scheme is compatible with the common market because it complies with the aid intensities laid down by European Community (EC) rules and requires that the jobs created be maintained for at least five years. This new scheme replaces an earlier regime, which was held to be incompatible with the EC State aid rules because it did not guarantee that the aid granted would be proportionate to the investments made and not in excess of the minimum necessary to restructure the companies in question.
Telecommunications: French Regulator Reviews Proposal to Impose Obligations on Mobile Operators
Nicola Chesaites
On 14 April 2005 the French regulator for electronic communications and postal services (ARCEP) notified to the Commission its draft decision relating to the French wholesale market for access and call origination on public mobile telephone networks, as required under the EU’s regulatory framework. In it ARCEP had proposed the imposition of an obligation on French mobile operators to grant access to their networks upon reasonable request from virtual mobile operators. This followed an analysis of the market by ARCEP and an opinion of the French competition authority which had found weak competition on the corresponding retail market. However, in light of recent indications that access agreements between mobile operators, Orange and SFR, and virtual mobile operators were to be concluded, ARCEP has decided simply to continue monitoring the market for the time being. The Commission has welcomed this move and has invited a new notification once the effects of the new developments have materialised, but in any event no later than the end of 2006.
Consumer Protection: Adventitious Presence of GMOs in Infant Foods
Philip Bentley QC
Regulation (EC) 1829/2003 on genetically modified (GM) food and feed requires that all GM food be labelled to show that it contains, or was produced from, GMOs. There is an exemption from this labelling requirement in respect of adventitious or technically unavoidable presence up to a limit of 0.9 per cent (previously 1.0 per cent for certain foods). Before the National Administrative Court, an Italian consumer association successfully challenged the 1 per cent labelling exemption as applied by Italian legislation to infant formulae. Upon appeal by the Italian Ministry of Public Health, a question was referred to the European Court of Justice (ECJ) in Luxembourg. The ECJ ruled that the labelling exemption for 1.0 per cent (now 0.9 per cent) applied to all foods, including infant formulae, and could not be called into question on the basis of the precautionary principle.
Consumer Protection: Trade in Genetically Modified Agricultural Commodities
Philip Bentley QC
The 119 parties to the Cartagena Protocol on Biosafety are meeting in Montreal, Canada, to negotiate binding rules on the documentation that must accompany genetically modified agricultural commodities when transported across international frontiers. The European Commission, negotiating for the European Union (EU), will push for rules that are clear, practical and consistent with EU law. In addition to documentation requirements, the meeting will negotiate other matters, including guidance on risk assessment for genetically modified organisms (GMOs) and rules of procedure for the Protocol’s compliance mechanism. A first step will also be taken in negotiations for the development of rules and procedures on liability for damage caused by GMOs.
Information Society: Commission’s Five Year Strategy to Boost Digital Economy
Elena Kostadinova
The European Commission has adopted the initiative “i2010 - A European Information Society for growth and employment”, a package of policies to harness the potential of the digital economy to deliver growth, jobs and modern, on-line public services. It is based on “three pillars”. The first pillar aims at creating a modern, market-oriented regulatory framework for the digital economy. The second pillar comprises the increase in EU investment in research on information and communication technologies (ICT) by 80 per cent and cooperation with the private sector. Two EU programmes will support this initiative – (i) the 7th Research Framework Programme granting up to EUR 1.8 billion annually for strategic research in fixed and mobile communications, embedded systems, nanoelectronics and high-quality audiovisual content, and (ii) the Competitiveness and Innovation Programme with EUR 802 million for promoting take-up of ICT applications. The third pillar seeks to promote “an inclusive European Information Society” supported by efficient and user-friendly ICT-enabled public services.
NEXT WEEK’S EVENTS
Monday 6 June – Friday 10 June 2005
COUNCIL MEETINGS
Competitiveness Council (Internal market, Industry and Research) (6 – 7 June 2005)
Economic and Financial Affairs Council (7 June 2005)
COURT OF JUSTICE
Judgments
Agriculture
C-287/02 Spain v Commission
Approximation of laws
Joined Cases C-211/03, C-299/03, C-316/03, C-317/03, C-318/03 HLH Warenvertrieb
Energy
C-17/03 Vereniging voor Energie, Milieu en Water and Others
Environment and consumers
C-135/04 Commission v Spain
C-270/03 Commission v Italy
Social security for migrant workers
C-543/03 Dodl and Oberhollenzer
Opinions
Approximation of laws
C-120/04 Medion
Competition
C-397/03 P Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission
European citizenship
C-258/04 Ioannidis
Regional policy
C-46/03 United Kingdom v Commission
COURT OF FIRST INSTANCE
Judgments
Intellectual property
T-316/03 Münchener Rückversicherungs-Gesellschaft v OHMI (MunichFinancialServices)
T-303/03 Lidl Stiftung v OHMI - REWE-Zentral (Salvita)
T-315/03 Wilfer v OHMI (ROCKBASS)
Staff Regulations of Officials
T-375/02 Cavallaro v Commission
