Brussels Brief - April 10, 2009
April 10, 2009
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Due to the closure of the Commission and other European institutions over the Easter period, the next Brussels Brief will be sent on Friday 24 April 2009.
KEY DEVELOPMENTS
Telecommunications—ECJ: CFI Decision Imposing Fine of EUR 10.35 Million on France Telecom Confirmed
Mélanie Bruneau
The European Court of Justice (ECJ) has upheld the Judgment of the Court of First Instance (CFI) which imposed a fine of EUR 10.35 million on France Telecom (FT) for abuse of a dominant position on the French internet access market. Following a sector inquiry launched by the European Commission in 1999, the prices charged by Wanadoo Interactive to its residential customers in France for high-speed internet access were reviewed. The Commission found that Wanadoo’s prices were predatory because: (i) they did not enable Wanadoo to cover its variable or full costs and (ii) they were fixed as part of a plan to pre-empt the high-speed internet access market during a key phase in its development. Considering that Wanadoo had abused its dominant position in the high speed internet access market, the Commission imposed a fine of EUR 10.35 million. Wanadoo challenged this decision before the CFI and following its merger with FT in 2004, FT succeeded to Wanadoo’s rights. On 30 January 2007, the CFI dismissed FT’s action and upheld the fine imposed on Wanadoo (see Brussels Brief, 2 February 2007). FT then appealed this Judgment before the ECJ. The ECJ found that the CFI did not make any errors of law in dismissing FT’s action. In addition, the ECJ found that the CFI was justified in finding that demonstrating the possibility to recoup losses is not a necessary precondition for a finding of predatory pricing.
Finance—Competition: Commission Pursues Visa over Card Transaction Fees
Andrea Hamilton and Thomas Evans
In the latest row over payment card fees, the European Commission has sent a Statement of Objections (SO) to Visa concerning its multilateral interchange fees (MIFs). The Commission believes MIFs may restrict competition between banks for accepting consumer payment cards, in violation of Article 81 EC.
MIFs are inter-bank fees that apply to point of sale transactions with consumer payment cards. Visa directly sets MIFs, which are paid by the merchants’ banks to the cardholders’ banks for accepting Visa payment cards. Merchants’ banks pass on these MIFs to merchants as part of the price merchants pay for accepting Visa payment cards. In the Commission’s view, MIFs establish a minimum price for accepting Visa payment cards, effectively restricting competition between merchants’ banks, inflating merchants’ costs, and ultimately resulting in higher consumer prices—without any countervailing consumer benefits.
The Commission is also concerned that other rules and practices by Visa may increase the restrictive effects of the MIFs, including the “honour all cards” rule and the “no surcharge” rule, because they limit merchants’ ability to manage their payment costs.
The Commission’s current investigation of Visa follows its challenge to MasterCard’s MIFs, which resulted recently in MasterCard agreeing to reduce temporarily its MIFs, pending resolution of its appeal before the Court of First Instance.
Finance—State Aid: Commission Announces Investigation into State Aid to Fortis and ABN Amro
Vasilios Bousis
The European Commission has opened an in-depth investigation concerning the compliance with EU State aid rules of State measures in favour of Fortis Bank Nederland (FBN) and ABN Amro.
The Dutch State purchased FBN and provided a large loan facility. The Commission now says that it has reason to believe that this aid may not fulfil the conditions laid down in its Communication on how EU State aid rules should be applied to banks during the current financial crisis. In particular, the Commission has expressed doubts that the amount and duration of the facility are limited to the minimum. Moreover, it has questioned whether the interest charged by the State is sufficient to avoid distortion of competition.
The purchase by the Dutch State of ABN activities from FBN for a price of EUR 6.5 billion will also form part of the Commission’s investigation. The transaction price may have been above the market value of these activities, thereby providing aid to FBN. It seems that this measure actually had the effect of a recapitalisation of FBN and the Commission has doubts as to whether the conditions for recapitalising banks have been fulfilled.
The opening of an in-depth investigation gives interested parties the opportunity to comment on the proposed measures. It does not in any way prejudge the outcome of the procedure.
Energy: EU Climate Package Adopted
Lawrence Grabau
The EU Council of Ministers has adopted the energy and climate change package negotiated by Member States in December 2008. The new legislation is intended to meet the European Union’s 2020 climate goals to reduce greenhouse gas emissions by 20 per cent below the 1990 levels and boost the share of renewables in the total energy mix to 20 per cent by the same date.
The package is composed of a number of measures: (i) revision of the European Union’s emissions trading scheme obliging power installations to buy all their emissions allowances at auction, (ii) establishment of a regulatory framework for the capture and underground storage of carbon dioxide (CO2), (iii) promotion of energy from renewable sources, and (iv) CO2 emission limits for new passenger cars and standards for fuel quality.
Transport: EIB Grants Additional Loans to European Motor Industry
Matthew Kopetski
The Board of Directors of the European Investment Bank (EIB) has approved EUR 866 million of loans to help European-based car makers design and manufacture cars with lower carbon emissions. These follow the EUR 3.6 billion in loans already approved by the EIB Board of Directors since December 2008 for the European motor industry.
Funding for these loans will be provided by the European Clean Transport Facility (ECTF), Structural and Cohesion funds and the EIB’s external lending mandate for Asia and Latin America. The ECTF will provide 63 per cent of the funds for these loans. Structural and Cohesion and external mandate funds will provide the remaining 37 per cent.
NEXT WEEK’S EVENTS
Monday 13 April – Friday 17 April 2009
COUNCIL MEETINGS
No Council meetings scheduled for next week.
COURT OF JUSTICE
No judgments or opinions scheduled for next week.
COURT OF FIRST INSTANCE
No judgments scheduled for next week.
