Brussels Brief - July 6, 2007
July 6, 2007
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KEY DEVELOPMENTS
Mergers: Commission Approves Planned Acquisition of Endesa by Enel and Acciona
Juan Gutiérrez
The European Commission has approved the acquisition of Spanish energy company Endesa S.A. by ENEL S.p.A., based in Italy, and Acciona S.A., based in Spain. Taking into account the divestment to E.ON of part of Endesa's activities, the only markets affected would be the generation/wholesale and retail supply of electricity in Spain. The Commission concluded that the transaction would not significantly strengthen Endesa’s position in any of these markets. Moreover, a number of other competitors such as Iberdrola, Union Fenosa and Gas Natural will remain active. The merger would not therefore appreciably increase the ability and incentives of the main electricity suppliers in Spain to coordinate their activites in the market.
Competition: Telefónica fined over EUR 151 Million for Margin Squeeze
Juan Gutiérrez
The European Commission has fined the Spanish incumbent telecoms operator Telefónica over EUR 151 million for abuse of its dominant position in the Spanish broadband market. Telefónica imposed unfair prices in the form of a margin squeeze between the wholesale prices it charged to competitors and the retail prices it charged to its own customers. Accordingly, competitors were forced to make losses if they wanted to match Telefónica's retail prices. The sanction appears to contradict the Telecoms Market Commission (CMT), Spain’s national regulator, who had approved Telefonica’s rates. However, allegedly only 30 per cent of wholesale prices were regulated by CMT, leaving Telefonica’s remaining prices free from regulation. Moreover, CMT based its approval on forecasts provided by Telefonica, which allegedly differed from the company’s own business plan and cost analysis. Apparent compliance with national regulatory frameworks will not provide companies with a cover for abusive practices.
Agriculture: Commission Adopts Proposals to Reform EU Wine Sector
Bróna Heenan
The European Union currently spends about half a billion euros every year getting rid of surplus wine for which there is no market. Reform is needed and following a lengthy consultation process, the European Commission has adopted proposals dealing with a wide range of issues aimed at reinvigorating the European wine sector. These include: (i) better labelling rules; (ii) the abolition of certain market management measures; (iii) bans on the use of sugar for wine enrichment; (iv) a five year scheme for exiting wine production (weighted in favour of early exit while taking account of environmental considerations); and (v) the extension of current planting restrictions until 2013 which will then be removed to allow competitive producers to expand production. The Commission will also launch a marketing campaign to promote EU wine in third countries.
VAT: Infringement Proceedings Against Poland and Portugal for Car Registration Tax
Sarah Goodwin
Within two months, Poland and Portugal must change their rules on whether car registration tax (RT) can be included in the taxable amount of VAT, in order to conform with the harmonised EU VAT system. Following amendment, dealers selling registered vehicles at a price including the RT will no longer be able to include this duty within the taxable amount of VAT due on the vehicle’s sale. The change is justified because tax liability is not incurred on sale but rather when vehicles are registered and the dealer pays RT on behalf of the purchaser. The Commission’s view is that this case concurs with the European Court of Justice Judgment in Case C-98/05 involving broadly analogous vehicle taxes levied in Denmark.
VAT: Infringement Proceedings Against UK for Cross Border VAT Recovery
Geert Dierickx
In December 2004 the United Kingdom amended its VAT legislation so that a taxable person established outside the European Union is denied recovery of UK VAT paid on goods or services used for insurance or financial transactions that are supplied to customers outside the EU. However, UK legislation allows a taxable person established within the EU to recover VAT in such cases. The European Commission has requested the UK to allow refunds in such cases also for taxable persons extablished outside the EU. If the relevant legislation is not amended within two months, the Commission may decide to refer the issue to the European Court of Justice.
Mergers: Commission Approves Nestlé’s Acquisition of Novartis' Medical Nutrition Business
Alana Tart
The European Commission has cleared the merger of Nestlé S.A. and Novartis' Medical Nutrition business (NMN) following a first phase investigation. Both parties are active in the enteral nutrition market. The Commission’s investigation found that the transaction posed competition issues in France, where the two main suppliers would be merging, and in Spain, where the leading position of NMN would be strengthened. In addition, the Commission found that the importance of established brands created significant barriers to entry and expansion. The transaction was approved following commitments to divest the healthcare nutrition business of NMN in France and that of Nestlé in Spain.
State Aid: Commission Authorises Italian Tax in Favour of Digital Equipment
Jérôme Cloarec
The European Commission has decided that the Italian tax reduction encouraging the purchase of digital decoders is in compliance with the EC Treaty. The reduction is equal to 20 per cent of the price of the equipment and up to a maximum of EUR 200 per decoder. Following the Commission investigation, it appeared that the subsidy gave an indirect advantage to broadcasters using digital technology. However, the Commission concluded that the measure was technologically neutral since the support is available whether the decoder is used for terrestrial, cable or satellite channels.
Internal Market: Minimum Resale Prices up in Smoke
Morten Nissen
Although the European Commission acknowledges that prices are efficient levers for reducing tobacco consumption, the Commission has, through reasoned opinions, called upon Austria, Ireland and Italy to amend their legislation setting minimum retail selling prices for cigarettes. Minimum prices breach Community legislation and distort competition by limiting the freedom of producers and importers to determine their selling prices. To reduce tobacco consumption, the Commission instead recommends that Member States increase excise duties. Unless the three Member States respond satisfactorily to the reasoned opinions within two months, the Commission may bring the cases before the European Court of Justice.
Financial Services: US to Observe EU Data Protection Principles for Data Received From SWIFT
Elena Kostadinova
The European Union has received the “Representations" of the US Treasury Department regarding its handling of EU personal data received from the Society for Worldwide Interbank Financial Telecommunication (SWIFT). These Representations are a unilateral commitment by the US Treasury inter alia to use any data received from SWIFT exclusively for counter terrorism purposes. In 2006, press releases revealed that the US Treasury had used its powers under the "Terrorist Finance Tracking Programme" to serve administrative subpoenas on SWIFT. These subpoenas required SWIFT in the US to transfer personal data regarding suspected individuals or entities. By transferring the data, however, SWIFT had breached EU data protection law. The Representations thus constitute one of the measures to address this infringement.
NEXT WEEK’S EVENTS
Monday 9 July – Friday 13 July 2007
COUNCIL MEETINGS
ECOFIN Council (9 and 13 July 2007)
COURT OF JUSTICE
Judgments
Environment and consumers
C-507/04 Commission v Austria
Opinions
Agriculture
Joined Cases C-260/06, C-261/06 Escalier
Area of Freedom, Security and Justice
C-77/05 United Kingdom v Council
C-137/05 United Kingdom v Council
Community own resources
C-19/05 Commission v Denmark
Freedom to provide services
C-404/05 Commission v Germany
C-393/05 Commission v Austria
Company law
C-337/05 Commission v Italy
Social policy
C-300/06 Voß
Taxation
C-442/05 Zweckverband zur Trinkwasserversorgung und Abwasserbeseitigung Torgau-Westelbien
COURT OF FIRST INSTANCE
Judgments
Common foreign and security policy
T-47/03 Sison v Council
T-327/03 Al-Aqsa v Council
Competition
T-282/06 Sun Chemical Group and Others v Commission
T-170/06 Alrosa v Commission
T-351/03 Schneider Electric v Commission
T-229/05 AEPI v Commission
T-266/03 CB v Commission
T-411/05 Annemans v Commission
Environment and consumers
T-229/04 Sweden v Commission
External relations
T-90/03 Fédération des industries condimentaires de France and Others v Commission
Intellectual property
T-263/03 Mülhens v OHMI - Conceria Toska (TOSKA)
T-150/04 Mülhens v OHMI - Minoronzoni (TOSCA BLU)
T-28/04 Mülhens v OHMI - Cara (TOSKA LEATHER)
T-192/04 Flex Equipos de Descanso v OHMI - Leggett & Platt (LURA-FLEX)
T-443/05 El Corte Inglés v OHMI - Bolaños Sabri (PiraÑAM diseño original Juan Bolaños)
Research, information, education, statistics
T-250/05 Evropaïki Dynamiki v Commission
T-312/05 Commission v Alexiadou
State aid
T-167/04 Asklepios Kliniken v Commission
