Brussels Brief - March 9, 2007
March 9, 2007
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KEY DEVELOPMENTS
Air Transport: Draft EU-US Aviation Agreement Reached
Jérôme Cloarec
On 2 March 2007 the United States and the European Union reached agreement on a draft “open skies” aviation deal to remove restrictions on transatlantic flights. The draft agreement includes: (i) removal of current restrictions on the number of carriers that are allowed to fly the transatlantic route; (ii) reciprocity of the rule which prevents European companies and individuals from owning more than a 25 per cent stake in US carriers; (iii) antitrust immunity to facilitate the development of airline alliances; and (iv) the right for European carriers to establish subsidiaries in the US to carry domestic traffic. Jacques Barrot, the European Commissioner for Transport, stated that the deal should provide up to EUR 12 billion in economic benefits and should create up to 80,000 jobs. It is expected that the draft agreement will be approved on the EU side at the Transport Council on 22 March 2007.
Mergers: Recorded Music Put on Hold (Sony-BMG)
Morten Nissen
The European Commission has opened an in-depth investigation into the merger between the recorded music businesses of Bertelsmann AG (BMG) and Sony Corp. A 2004 Commission decision to approve the Sony-BMG merger was annulled by the European Court of First Instance in 2006 for lack of sufficient evidence. The Commission is reassessing the transaction under the terms of the Merger Regulation that was applicable to transactions before 1 May 2004. The territorial scope of the assessment is limited to the 15 pre-enlargement countries of the European Union. The transaction will be evaluated in the light of current market conditions, including the increased sales of online music. The Commission has until 2 July 2007 to reach a final decision on whether to approve the merger.
Internal Market: ECJ Ruling Opens Market to Legitimate Gambling Activities
Benoît Keane
The European Court of Justice (ECJ) has found that Italian legislation on the regulation of gambling is contrary to EU law in certain respects. Under Italian legislation, the organising of games of chance is subject to the grant of a licence and prior police authorisation. However, licences are not available to companies whose individual shareholders are not always identifiable, for example, companies quoted on regulated capital markets. The ECJ ruled that a blanket exclusion of quoted companies was illegal under EU law on freedom of establishment and freedom to provide services. Moreover, any criminal penalties for failure to obtain a licence are also illegal under EU law if such failure was due the illegal blanket exclusion of quoted companies. This judgment could help to open up the EU market to legitimate cross-border gambling activities.
Mergers: Spain Close to Facing Court Case on E.ON/Endesa Conditions
Alana Tervo
In the ongoing process of E.ON’s bid to acquire Endesa (last reported in Brussels Brief on 22 December 2006) the European Commission sent a second letter of formal notice to Spain on 1 February 2007. The Commission required Spain to explain why the conditions imposed upon the bid had not been fully withdrawn. Spain argued that the conditions were necessary to secure national energy supplies, but the Commission was not convinced and still sees the conditions as protectionist and aimed at creating a national champion. Consequently, the Commission has now started ‘second stage’ infringement proceedings which could lead to a reference to the European Court of Justice if the Commission does not receive a satisfactory reply from Spain by 16 March 2007. If a court action ensues it would run in parallel to another action reported in Brussels Brief on 26 January 2006 regarding the powers of Spain’s gas and electricity regulator to review the E.ON bid.
Air Transport: EU Wants to Reduce US Access to Passenger Airline Data
Mélanie Bruneau
The European Union has entered into negotiations on a new passenger data transfer agreement with the United States. It aims to reduce the number of personal details that people must provide to the US authorities when travelling to airports in the United States. The EU also wants to end the practice under which US authorities can freely access information from airline computers. Currently under US law 34 types of data, including credit card and passport details, e-mail addresses and travel itinerary, can be accessed by the US Department of Homeland Security and shared with other law enforcement agencies. According to EU Commissioner Franco Frattini, only 19 types of data need to be handed over. In addition, the EU would like to ensure that the data is transmitted to US customs only when they make a request for it.
Internal Market: Commission to Cut Administrative Burdens for Businesses
Elena Kostadinova
Following the adoption of an Action Programme on 24 January 2007, the European Commission has now made three proposals for reducing national administrative burdens for businesses. These three out of ten “fast track” actions benefit primarily small and medium sized enterprises. First, public limited liability companies will not have to commission written reports on mergers or divisions unless requested by their shareholders. Second, freight carriers will no longer be required to provide a number of documents when transporting goods within the EU. Third, small butcher shops, bakeries and grocery shops will not be required to keep records on hygiene procedures and practices. The Action Programme, which also contains a list of 13 priority areas for further proposals, including tax and public procurement, should be completed by 2012.
Trade: EU and Ukraine Negotiate Free Trade Agreement
Michal Cieplinski
The European Commission and Ukraine have commenced discussions on a new bilateral agreement that will enhance political co-operation, and increase trade and investment. The negotiations are aimed at opening new prospects for EU-Ukraine relations, including also a Free Trade Area and a deeper partnership on energy. However, establishment of a Free Trade Area, which will be an integral part of the Agreement, will be negotiated only once Ukraine has finalised its accession to the World Trade Organisation, expected by the end of 2007. It is expected that the new agreement will be finalised by the end of 2008, which is the tenth anniversary of the current EU-Ukraine partnership and co-operation agreement.
State Aid: Commission authorises Cyprus Airways’ Restructuring Plan
Geert Dierickx
In May 2005 the Commission authorised the grant of a Government-backed loan of EUR 51 million in order to restore Cyprus Airways’ viability. In November 2005 Cyprus proposed, in addition to this loan, a restructuring plan comprising (i) a loan amounting to EUR 96 million and guaranteed by the Government up to EUR 78 million; (ii) the sale of Cyprus Airways’ charter division to the Government with the obligation that Cyprus Airlines and the separate charter division would be run as independent competitors; and (iii) a capital increase of EUR 24 million involving public and private shareholders. Following its investigation, the Commission has now concluded that this restructuring plan is compatible with EU guidelines on restructuring aid.
Monday 12 March – Friday 16 March 2007
COUNCIL MEETINGS
No meetings scheduled for next week
COURT OF JUSTICE
Judgments
Competition
C-95/04 P British Airways v Commission
Freedom of establishment
C-524/04 Test Claimants in the Thin Cap Group Litigation
Freedom to provide services
C-432/05 Unibet
Free movement of goods
C-54/05 Commission v Finland
Intellectual property
C-29/05 P Office for Harmonisation in the Internal Market v Kaul
C-171/06 P T.I.M.E. ART v Devinlec and Office for Harmonisation in the Internal Market
Taxation
C-35/05 Reemtsma Cigarettenfabriken
Opinions
Social policy
C-116/06 Kiiski
COURT OF FIRST INSTANCE
Judgments
Commercial policy
T-107/04 Aluminium Silicon Mill Products v Council
