Brussels Brief - September 15, 2006
September 15, 2006
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KEY DEVELOPMENTS
Taxation: Increase of Minimum Excise Duty on Alcohol and Alcoholic Beverages
Elena Kostadinova
The European Commission has adopted a proposal to increase the minimum rates of excise duty on alcohol and alcoholic beverages by 31 per cent as of 1 January 2008. Pursuant to a Council Directive of 1992 on the approximation of the rates of excise duty on alcohol and alcoholic beverages, the excise duty should be at least EUR 0.748 per hectolitre of beer, EUR 45 per hectolitre for intermediate products such as port wines and, for industrial alcohol, EUR 550 per hectolitre of pure alcohol equivalent. The Commission considers that these rates no longer correspond to economic reality and have to be adjusted in line with the inflation rate for the period 1993 to 2005 of 31 per cent. Since most Member States impose excise duties at rates higher than these minima, the increase will only affect the beer market in Czech Republic, Germany, Latvia, Lithuania, Luxembourg, Malta and Spain and the intermediate products market in Cyprus, Greece, Malta, Portugal and Spain. These Member States may request a transitional period if they experience any difficulties in increasing their national rates by 1 January 2008.
Competition: Commission Fines Dutch Road-Bitumen Cartel
Mélanie Bruneau
The European Commission has fined 14 companies a total of EUR 266.7 million for price-fixing of Dutch road-bitumen in violation of Article 81 of the EC Treaty. From 1994 to 2002, eight bitumen suppliers (including BP, Kuwait Petroleum, Nynäs, Shell and Total) and the six biggest road construction companies in the Netherlands fixed the gross price of all road pavement bitumen sold in the Netherlands. They also agreed uniform minimum rebates for the construction companies that were cartel members and a smaller maximum rebate for all other road builders. In setting the fines, the Commission took into account the very serious nature of the infringement, the limited size of the market, the long duration of the cartel and the size of the firms involved. Shell and KWS had their fines increased as they began the cartel and played a leading role in it. Shell’s fine was also increased for being a repeat offender while KWS’ fine was increased for having tried to obstruct the Commission’s investigation. Some companies co-operated with the investigation, such as BP who was granted full immunity and Kuwait Petroleum whose fine was reduced by 30 per cent. Nynäs, Shell, and Total also claimed a reduction of the fine but failed to qualify. None of the construction companies applied for leniency.
State Aid: Commission Approves Regional Aid Maps for Seven Member States
Yannis Virvilis
Under the EC State aid rules the European Commission has approved regional aid maps for the period 2007 to 2013 for seven Member States (Estonia, Greece, Hungary, Latvia, Poland, Slovakia and Slovenia). These maps define the regions within a Member State that are eligible for regional aid and establish the maximum level of aid in the selected regions. The Commission decision comes after the adoption of Regional Aid Guidelines in December 2005, whereby the adoption of a regional aid map has become necessary to ensure continuity of Structural Fund programmes and regional policy after 2006. The Commission has committed itself to decide on regional aid maps for the remaining Member States by the end of the year.
Financial Sector: Proposal to Improve Supervisory Approval Process for M&As
Patrice Corbiau
The European Commission has put forward a proposal for a new Directive aiming to improve the approval process that Member States' supervisory authorities have to follow when assessing proposed M&As in the banking, insurance and securities sectors. In particular, the proposed new Directive, which would amend many existing Directives in these sectors, would provide supervisory authorities with a closed list of criteria on which the acquiring company should be assessed. Such criteria include reputation and financial soundness of the proposed acquirer, reputation and experience of any person who may run the merged institution or firm, compliance with relevant EU Directives, and risk of money laundering and terrorism financing. If adopted, these new rules should help to improve consistency and transparency in the handling of M&A requests across the EU.
Institutions: Direct Notification to National Parliaments
Andrea Hamilton
The European Commission has announced that it will send its policy initiatives, including legislative proposals and consultation papers, directly to the national parliaments of all EU Member States. The Commission’s policy initiatives, which will be transmitted by e-mail, will invite comment from national parliaments in an effort to improve the process of policy development. While the Commission has committed to consider carefully any comments received from national parliaments, it is not obliged to follow up or take action on such commentary.
Trade: Chinese Rice Imports Under Scrutiny
Michal Cieplinski
Following the European Commission’s decision in late August to impose emergency measures on imports of long grain rice from the US (see Brussels Brief of 8 September 2006), the Commission has also decided to verify imports of rice from China. The Commission’s action was caused by reports from Greenpeace and Friends of the Earth that they had found evidence of a strain of GMO rice in products imported from China. The Commission requested that the samples of rice imported from China be verified by competent authorities of the Member States to confirm the findings of Greenpeace and Friends of the Earth. If GMO rice is found in samples of rice imported from China, the Commission will impose emergency measures requiring all shipments of rice from China to be certified as GMO-free.
State Aid: Commission Authorises Slovak Funding of Hornonitrianske Bane Prievidza
Maria Scimemi
The European Commission has authorised an initiative by Slovakia to grant public funding to the mining company Hornonitrianske Bane Prievidza a.s (Hornonitrianske). The EUR 965,000 aid will be used to cover disability pensions which must be paid by the company to miners and former miners who were victims of accidents in the mine prior to November 1993. Although the payment will provide the mining company with an economic advantage, the Commission found that the proposed aid measure is consistent with EU State aid rules for the coal industry as it covers the costs of inherited liabilities of the mining company. Aid to cover inherited liabilities may be considered compatible with the common market provided that the latter are exceptional and that the amount of aid does not exceed such liabilities.
State Aid: Pharmaceutical Laboratories Challenge French Sales Tax
Philip Bentley QC
The European Court of Justice (ECJ) has ruled that a French tax on sales by pharmaceutical laboratories direct to pharmacies, rather than via wholesale distributors, could be challenged as an illegal State aid. French law exempted wholesale distributors from the tax in compensation for the public service obligations imposed on them. Based on earlier case law, the pharmaceutical laboratories could challenge the State aid constituted by the tax exemption for wholesale distributors, but could not challenge the fact that they themselves had to pay the tax. In an innovative judgment, the ECJ ruled that the tax was the instrument through which the illegal State aid was implemented and so a pharmaceutical laboratory could seek reimbursement of that part of the tax which constituted an unfair advantage for the wholesale distributors.
NEXT WEEK’S EVENTS
Monday 18 September – Friday 22 September 2006
COUNCIL MEETINGS
Agriculture and Fisheries Council (18 September 2006)
COURT OF JUSTICE
Judgments
Approximation of laws
C-356/04 Lidl Belgium
Competition
C-105/04 P Nederlandse Federatieve Vereniging voor de Groothandel op Elektrotechnisch Gebied v Commission
C-113/04 P Technische Unie v Commission
C-167/04 P JCB Service v Commission
Freedom of establishment
C-506/04 Wilson
C-193/05 Commission v Luxembourg
Freedom to provide services
Joined Cases C-392/04, C-422/04 i-21 Germany
C-168/04 Commission v Austria
Opinions
Environment and consumers
C-183/05 Commission v Ireland
Freedom to provide services
C-76/05 Schwarz and Gootjes-Schwarz
C-318/05 Commission v Germany
Taxation
C-313/05 Brzeziski
COURT OF FIRST INSTANCE
Judgments
ECSC
T-166/01 Lucchini v Commission
