Brussels Brief - December 1, 2006
December 1, 2006
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KEY DEVELOPMENTS
Competition: Commission Fines Producers and Traders of Synthetic Rubber EUR 519 Million for Price Fixing Cartel
Patrice Corbiau
The European Commission has fined five groups of companies (Eni, Shell, Dow, Unipetrol and Trade-Stomil) a total of EUR 519 million for participating in a cartel to fix prices and share customers for certain types of synthetic rubber (Butadiene Rubber – BR, and Emulsion Styrene Butadiene Rubber - ESBR). BR and ESBR are mainly used in production of tyres and other consumer goods, such as shoe soles and floor coverings. The Commission’s investigation was prompted by applications for leniency lodged by Bayer in December 2002 and January 2003. The Commission increased the fines by 50 per cent for Eni, Shell and Bayer because they had already been condemned for cartels in the polypropylene, PVC and citric acid sectors. However, Bayer received full immunity from fines for having been the first company to reveal the cartel. Dow’s fine was reduced by 40 per cent following a leniency application. The overall fine is the second highest imposed by the Commission in a cartel case. It brings the total amount of cartel fines imposed in 2006 to EUR 1.843 billion.
Environment: Commission Decides on Ten National Allocation Plans for 2008-2012 Emissions Trading Period
James Arneill
The European Commission has decided on the first ten National Allocation Plans (NAPs) for allocating CO2 emission allowances to energy-intensive industrial plants, for the 2008-2012 trading period. In doing so, it reduced the allowances by almost seven per cent below the emission levels proposed by the Member States and seven per cent below the 2005 levels. The approved NAPs are in relation to Germany, Greece, Ireland, Latvia, Lithuania, Luxembourg, Malta, Slovakia, Sweden and the UK. The Commission reviewed the NAPs against 12 allocation criteria listed in the Emissions Trading Directive, and it required all ten Member States to modify their plans in some way. The Commission has started infringement proceedings against Austria, Czech Republic, Denmark, Hungary, Italy and Spain for not submitting their NAPs on time.
Internal Market: European Court of Justice Blocks Internet Tax Loophole
Alexandra Rogers
The European Court of Justice (ECJ) has ruled that only products acquired and transported personally by private individuals are exempt from excise duty in the Member State of importation. This case concerned a group of Dutch wine enthusiasts who regularly commissioned a van to purchase wine in France, where duty is much lower than in the Netherlands. Even though the total number of bottles purchased was less than the individual limit of 90 litres for personal consumption, the Dutch authorities still applied domestic duty because no one from the group accompanied the delivery. The ECJ’s decision means that people who wish to take advantage of cheaper alcohol or tobacco prices in other Member States will have to travel there themselves rather than ordering the goods online. The reprieve that this judgment affords to national tax authorities may however be short-lived, as the European Commission is already proposing amendments to revise the relevant legislation.
Trade: EU Requests WTO Consultations with Canada Over Excise Duties on Wine and Beer
Michal Cieplinski
The European Union has lodged a formal request for consultations with Canada concerning the new Canadian fiscal measures affecting wine and beer. On 18 October 2006, the Canadian Government accepted the introduction of new legislation which eliminates or reduces excise duties on Canadian wine made from 100 per cent Canadian-grown agricultural products and on domestic beer, while leaving the excise duties on imported wine and beer intact. The Act is currently being debated in the Canadian Parliament and is expected to be adopted shortly. Once approved, the Act foresees retroactive application from 1 July 2006. The exemption is however already being applied on the basis of an administrative decision of Canada’s Revenue Agency. If the dispute cannot be satisfactorily resolved in consultations, which normally last for at least 60 days, the EU may ask for constitution of a WTO Panel to rule on the legality of Canadian excise duties.
Telecommunications: Commission Objects to UK Mobile Termination Rates
James Arneill
The European Commission has asked the UK telecommunications regulator, OFCOM, to reconsider its valuations of wholesale tariffs charged by the five UK mobile phone operators for terminating calls to their customers. According to the Commission, OFCOM’s proposed tariffs keep termination rates higher than necessary, due to the calculation of 3G spectrum costs being made the basis of prices paid at the spectrum auctions, which in today's context are considered inflated. This approach is considered detrimental to competition in the UK’s mobile market and would lead to higher prices for consumers. On a more general level, the Commission has also advocated moving towards a common, more market-based approach to allocating the radio spectrum needed for services and devices to work EU-wide.
Trade: EU and Thailand Agree on a New EU Import Regime for Cooked and Salted Meat
Mélanie Bruneau
The European Commission has concluded an agreement with Thailand on a new regime for imports of salted poultry meat and cooked chicken meat into the EU. The agreement modifies the current maximum tariff rate concessions and creates new tariff rate quotas, in conformity with the procedure set out by GATT Article XXVIII. Salted poultry meat is currently subject to a maximum tariff rate of 15.4 per cent with no volume restrictions, whereas the new concession will provide for a total ceiling of 264,245 tonnes imported at the same maximum rate of 15.4 per cent ad valorem. Cooked chicken meat is currently subject to a bound tariff rate of 10.9 per cent and the concession will provide for a total tariff quota of 250,953 tonnes imported under a tariff of 8.0 per cent ad valorem. The volume attributed to Thailand for salted poultry meat and cooked chicken meat is 92,610 and 160,033 tonnes respectively.
Mergers: European Space Deal Goes into Second Phase
Yannis Virvilis
The European Commission has opened an in-depth second phase investigation into the acquisition by French company Thalès of Alcatel’s stakes in two space joint ventures Alcatel Alenia Space (AAS) and Telespazio. These two companies are currently jointly controlled by Alcatel and Finmeccanica. The Commission’s concerns are vertical in nature and are based on the fact that Thalès has a near monopoly in the market for Travelling Wave Tubes (TWTs), which are a critical component for satellites, where AAS is active. The Commission’s investigation has shown that post-merger, the merged entity would have the incentive to apply discriminatory terms in its sales of TWTs to both satellite operators and other companies active in TWT-based subsystem integration. The parties had offered commitments at the first phase. However, these were found to be inadequate to alleviate the competition concerns.
Competition: Commission Finds Spain’s New Conditions on E.ON/Endesa Deal Illegal
Andrea Hamilton
Following a preliminary assessment, the European Commission has announced that Spain’s new conditions on E.ON’s acquisition of Endesa are inconsistent with Community law and thus infringe Article 21 of the EC Merger Regulation. Spain’s Minister for Industry, Tourism and Trade imposed the new conditions on 3 November 2006, requiring E.ON, among other things, (i) to sell Endesa if another company acquires a controlling stake in E.ON, and (ii) to abide by Endesa’s current investment plans. In the Commission’s view, the new conditions infringe EC Treaty rules on the free movement of capital and goods and freedom of establishment. Spain may submit comments by 13 December 2006, but has already publicly disagreed with the Commission’s preliminary assessment. If the Commission confirms its initial findings, Spain could be required to withdraw the infringing conditions or face court action.
Environment: REACH Adoption may be Delayed
Elena Kostadinova
The proposed Regulation on Registration, Evaluation and Authorisation of Chemicals (REACH) is due to be discussed at second reading in the EU Parliament on 12 December 2006. Preliminary talks between the EU institutions have not yet led to a mutually satisfactory solution. The discussions are focused on the amendments proposed by the Environmental Committee of the European Parliament on 10 October 2006 (see Brussels Brief of 13 October 2006). The main outstanding issue remains "substitution" of dangerous chemicals with safer alternatives. The EU institutions are considering whether to oblige companies requesting an authorisation either (i) to present binding timetables for substitution of toxic chemicals with safer alternatives, or (ii) to present a research plan for safer alternatives only. If no consensus is reached, the legislative procedure will enter in a new “conciliation” stage which will delay REACH adoption.
Monday 4 December – Friday 8 December 2006
COUNCIL MEETINGS
Competitiveness Council (4 – 5 December 2006)
Justice and Home Affairs Council (JHA) (4 – 5 December 2006)
COURT OF JUSTICE
Judgments
Area of Freedom, Security and Justice
C-48/06 Commission v Luxembourg
Company law
C-306/05 SGAE
Competition
C-94/04 Cipolla
C-202/04 Macrino and Capodarte
Environment and consumers
C-54/06 Commission v Belgium
C-78/06 Commission v Luxembourg
C-91/06 Commission v Austria
Fisheries policy
C-161/05 Commission v Italy
Taxation
C-240/05 Eurodental
C-13/06 Commission v Greece
Opinions
Police and judicial cooperation in criminal matters
C-288/05 Kretzinger
C-367/05 Kraaijenbrink
COURT OF FIRST INSTANCE
Judgments
Competition
T-303/02 Westfalen Gassen Nederland v Commission
