Brussels Brief - April 4, 2008
April 4, 2008
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KEY DEVELOPMENTS
State Aid: European Commission Investigates Northern Rock Rescue Package
Benoît Keane
The European Commission has launched an in-depth investigation into the UK Government’s rescue of the mortgage lender Northern Rock. The Commission will determine whether the UK’s financial aid to the bank complies with EU State aid rules on subsidies. Northern Rock was taken into public ownership in February 2008 after it was caught up in the global mortgage crisis. According to the UK Government’s restructuring plans, which were notified to the European Commission in March, the bank will continue to borrow billions of pounds from the Bank of England until 2011 and the Treasury has provided a guarantee to retail deposits. However, the UK authorities have also agreed to reduce the bank’s lending operations and to ensure that any loans granted are repaid. The opening of the in-depth investigation does not prejudice the Commission's final decision on the compatibility of these measures with the State aid rules. The Commission also approved the short term rescue measures and found that the emergency liquidity provided by the Bank of England to Northern Rock at market rates did not constitute State aid. The Commission has requested that the UK authorities provide it with further information about the restructuring package and has invited interested parties to submit observations.
Air Transport: Cheaper Tickets on Transatlantic Flights
Philip Torbøl
As the so-called “open skies” agreement between the European Union and the United States entered into force on 30 April 2008, any European airline is now able to fly from any EU Member State to any city in the United States. Reciprocally, US airlines now have the option to provide flights to any EU airport. Previously, access rights were limited to bilateral agreements between the US and individual EU Member States. The EU-US open skies agreement is a first step towards a fully liberalised EU-US aviation market and negotiations for a second stage agreement will begin in May 2008. Nevertheless, this first open skies agreement is expected to increase competition substantially on transatlantic routes and, as a result, ticket prices for transatlantic flights could drop by 8 to 10 per cent in the next few months.
Competition: GlaxoSmithKline Infringed Competition Rules by Restricting Parallel Trade
Bróna Heenan
Advocate General Ruiz-Jarabo has delivered a non-binding opinion to the European Court of Justice (ECJ), finding that GlaxoSmithKline Plc (GSK) abused its dominant position by limiting distribution of certain pharmaceuticals to Greek wholesalers. This case, which was referred to the ECJ by a Greek national court, arose after GSK began to supply certain drugs to hospitals and pharmacies in Greece, bypassing Greek wholesalers. GSK was aware that Greek wholesalers were re-exporting GSK’s drugs from Greece, where drug prices are low, to Member States with higher drug reimbursement rates, a practice known as parallel trade. While GSK eventually resumed distribution to Greek wholesalers, GSK only supplied quantities sufficient for the Greek domestic market. The Advocate General concluded that GSK unjustifiably used its dominance to prevent parallel trade, rejecting the argument that state intervention in pharmaceutical markets justified GSK’s conduct. The ECJ will consider the Advocate General's Opinion and render its own judgment.
Mergers: Nokia/Navteq Deal Enters into Second Phase
Yannis Virvilis
The European Commission has decided to open a second phase in-depth investigation into the acquisition of the US company, Navteq, by Nokia. Navteq is one of only two worldwide producers of navigable digital maps, which is an input for navigation services that can, for example, be distributed via mobile phones. The Commission has identified significant vertical concerns in relation to this deal because of the duopoly market for navigable digital maps and the strong position of Nokia on the market for mobile handsets. The Commission is also currently analysing the acquisition of the other navigable digital maps provider, TeleAtlas, by TomTom.
Internal Market: Denmark and Sweden Post Offices Announce Intention to Merge
Elena Kostadinova
Post Danmark A/S, the Danish post office, and Posten Sverige AB, the Swedish post office, have announced their intention to merge into a single entity to be based in Stockholm. Post Danmark is owned by the Danish State (75 per cent), CVC Capital Partners (22 per cent) and Post Danmark’s employees (3 per cent) and owns 25 per cent of La Poste, the Belgian post office. Posten Sverige is entirely owned by the Swedish State. As a result of the merger, Sweden will hold 58.2 per cent of the capital of the new company and the remaining 41.8 per cent will be divided between Post Danmark’s shareholders. The objective of the merger is to help both companies face the three main market challenges affecting postal services: (i) European deregulation; (ii) tougher competition; and (iii) electronic alternatives. The deal must first be approved by the Danish and Swedish Parliaments. Further regulatory approvals may also be required.
Competition: Commission Initiates Formal Proceedings Against Visa Europe
Patricia Armesto
The European Commission has decided to open formal antitrust proceedings against Visa Europe Limited in relation to its multilateral interchange fees (MIFs) for cross-border point of sale transactions within the European Economic Area (EEA) using Visa payment cards. The MIF is a charge on each payment at a merchant outlet, retained by the customer's bank and charged to the merchant's bank, which then takes this cost element on board in setting its prices to merchants. The proceedings will seek to establish whether these practices constitute infringements of Article 81 of the EC Treaty and Article 53 of the EEA Agreement, which forbid price fixing. Visa Europe's President has reportedly stated publicly that, in his view, a negotiated settlement would be appropriate in this case.
Trade: WTO Criticises the European Union, the United States and Canada in Beef Row
Jonathan Aitken
The World Trade Organisation (WTO) has found that the European Union, the United States and Canada all failed to respect WTO rules in the row over beef treated with growth hormones. This long standing dispute dates back to the European Union's decision to ban imports of beef originating in Canada and the United States and produced using growth promoting hormones. In 1998, the WTO ruled that scientific evidence supporting the EU restrictions was not specific enough and allowed the United States and Canada to retaliate by imposing import tariffs on a list of EU products. In 2003, the European Union contested these sanctions, claiming it had revised its rules based on new scientific facts. On 31 March 2008, the WTO panel found that the United States and Canada should have re-submitted their complaints after the European Union adopted revised rules in 2003, rather than simply maintaining retaliatory measures against the European Union. At the same time, however, the panel found that the revised EU rules do not comply with WTO rules on sanitary and phytosanitary measures. Both sides have claimed a victory of sorts over the other and both have the possibility of appealing the findings.
European Court of Justice: Same Sex Couples Entitled to Partner’s Pension
Juan Gutiérrez
The European Court of Justice (ECJ) has ruled that the refusal to grant a survivor’s pension to same sex life partners constitutes direct discrimination on the grounds of sexual orientation, within the meaning of Council Directive 2000/78/EC. In a case referred by the Munich Court, Mr Maruko and his partner entered into a registered life partnership in 2001. Following his partner’s death in 2005, Mr Maruko applied for a widower’s pension through his partner’s occupational insurance scheme. His application was rejected, however, on the grounds that current national law does not provide for pension entitlement in the case of surviving life partners. Although Germany reserves marriage solely for heterosexual couples, it has established the institution of “life partnership” and has gradually applied to it benefits equivalent to those acquired by marriage. The ECJ found that, because Germany’s current national provisions limit entitlement to a survivor’s pension to spouses only, registered life partners are treated less favourably.
NEXT WEEK’S EVENTS
Monday 7 April – Friday 11 April 2008
COUNCIL MEETINGS
Transport, Telecommunications and Energy Council (TTE) – Transport (7 April 2008)
COURT OF JUSTICE
Judgments
Approximation of laws
C-102/07 adidas and adidas Benelux
Company law
C-337/05 Commission v Italy
C-393/06 Ing. Aigner
Environment and consumers
C-412/06 Hamilton
C-442/06 Commission v Italy
Freedom of movement for persons
C-398/06 Commission v Netherlands
Free movement of goods
C-265/06 Commission v Portugal
Taxation
C-167/05 Commission v Sweden
C-309/06 Marks & Spencer
Opinions
Customs union
C-132/07 Beecham Group and Others
Free movement of goods
C-141/07 Commission v Germany
Law governing the institutions
C-345/06 Heinrich
Police and judicial cooperation in criminal matters
C-297/07 Bourquain
COURT OF FIRST INSTANCE
Judgments
Agriculture
T-364/04 Greece v Commission
Competition
T-271/03 Deutsche Telekom v Commission
