Brussels Brief - November 18, 2005
November 18, 2005
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KEY DEVELOPMENTS
Mergers: Commission Opens In-Depth Investigation into T-Mobile Austria’s Takeover of Tele.Ring
Mélanie Bruneau
The European Commission has opened an in-depth investigation under the EU Merger Regulation into the planned acquisition by T-Mobile Austria of competitor Tele.Ring. T-Mobile Austria and Tele.Ring are both active in mobile telephony networks and the provision of services to consumers in Austria. During its initial investigation, the Commission found that the proposed acquisition could create significant competition problems. As T-Mobile’s market share amounts to approximately 23 per cent and that of Tele.Ring to about 12 per cent, the removal of Tele.Ring as a competitor in the market for consumers could harm Austrian consumers through possible price increases. The Commission has until mid-February 2006 to take a final decision on whether the concentration would significantly impede effective competition within the Common Market.
Air Transport: Airline Blacklist
Iveta Mikelsone
The European Commission, Parliament and Council have agreed on the proposal for a regulation designed to inform air transport passengers on the identity of operating carriers and on the publication of safety information by Member States. This regulation will oblige Member States to publish a list of air carriers which are banned from its airspace or which are subject to traffic rights restrictions for safety reasons. The Commission will publish a consolidated list of such carriers. The regulation will also ensure that passengers are informed of the identity of the air carrier upon reservation, which applies to both air carriers and tour operators. This regulation is just one of a range of measures aimed at improving aviation safety.
Air Transport: Commission to End Immunity of IATA Passenger Tariff Arrangements
Philip Torbøl
Since 1993, the European Commission has granted immunity from competition rules to certain arrangements between the airlines that were made under the auspices of the International Air Transport Association (IATA). The immunity, which takes the form of Block Exemption Regulations, is now being reviewed by the Commission who considers that immunity for IATA passenger tariff arrangements in relation to intra-EU interlining should be repealed as of 1 January 2007. This is because IATA interlining arrangements only constitute a small part of overall interlining in the EU and there are several alternatives such as global airline alliances, code-share agreements and bilateral interlining agreements. As a result, the Commission finds that there is insufficient indication that the benefits of such price agreements concluded within IATA outweigh the risk of restrictions to competition. The Commission will now consult EU Member States and interested parties before adopting the new Block Exemption Regulations in 2006.
Trade: EU and China Form Voluntary Agreement on Product Safety
Alana Tervo
The European Union and China have signed a Memorandum of Understanding on product safety for both food and non-food trade. The voluntary agreement aims to establish better communication and collaboration between responsible authorities on food safety, general product safety and on Sanitary and Phytosanitary issues. Both the EU and China have agreed to exchange information and to set up a series of joint initiatives to help protect consumers. China is the EU’s second largest trading partner, exporting both food products and consumer goods. Trade between the two regions is expected to grow and this agreement should assist in reaching solutions to any future trade problems as well as increasing consumers’ confidence and trust in products traded.
Trade: EU to Open Agricultural and Fisheries Talks with Euro-Mediterranean Countries
Anthony Seymour
The EU is set to begin negotiations with its Euro-Mediterranean Partners in an attempt to liberalise trade in processed agricultural and fisheries products. The talks will be in furtherance to the Barcelona Declaration which is due for its tenth anniversary on 28 November 2005. One of the main aims of the Declaration is the establishment of a free-trade area between the EU and its Partners by 2010. The negotiations will also observe the European Neighbourhood Policy which was developed following the enlargement of the European Union in 2004, envisaging increased political, economic and cultural co-operation between the EU and its neighbours. It is hoped that the negotiations will be concluded by the end of 2006 so that agreements relating to free trade in agricultural and fisheries products will come into force on 1 January 2007.
Mergers: Commission Clears Kappa Holding – JSG Deal Subject to Conditions
Yannis Virvilis
The European Commission has cleared the acquisition of the Dutch company Kappa Holding by the international packaging group Jefferson Smurfit (JSG) after the parties offered a number of commitments. The Commission’s investigation showed that the combination of the two companies and their horizontal overlap would give rise to competition concerns in several Member States in the markets for corrugated boxes, solid board boxes, graphic boards and solid board partitions. All these products are used in the packaging industry. To remove the Commission’s concerns, the parties undertook to divest several plants and businesses in five different Member States.
Mergers: Reform of the EU merger rules
Elena Kostadinova
The European Commissioner for Competition, Neelie Kroes, will consult Member States and stakeholders on a reform of the EU merger rules to allow the Commission to scrutinise mergers of companies whose principal business is in a single Member State. The call for reform followed a Commission decision to refer Gas Natural’s takeover of Endesa to the Spanish competition authorities. Under current EU rules the Commission has no jurisdiction when each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State. According to the Commissioner the two-thirds rule ‘no longer reflects an optimal allocation of competence between the national and the Community level and in some cases constitutes an obstacle to a consistent treatment of cases’. The proposal is expected to meet opposition from those Member States who traditionally support their national industries.
State Aid: Commission Opens Formal Investigation into Electricity Sector in Hungary
Patrice Corbiau
The European Commission has opened a formal investigation into Hungary’s long term power purchase agreements (PPAs) concluded between the State-owned electricity network operator MVM Rt. and the power generators. The PPAs provide that MVM Rt. has the obligation to buy a fixed quantity of electricity at a fixed price and include a guaranteed profit. At present, PPAs cover around 80 per cent of the Hungarian electricity generation market and leave very little space for new market entrants. Therefore, the Commission has doubts about the compatibility of the PPAs with EC Treaty State aid rules and in particular with the Commission Communication on the methodology for analysing State aid linked to stranded costs in the electricity sector. The investigation will allow the Commission to obtain more information on the PPAs and will give all interested third parties the opportunity to submit comments for further assessment.
Competition: Commission to Take Further Action Against Distortions on EU Energy Market
Elena Kostadinova
The European Commission has published its preliminary findings of the inquiry in the energy sector. The impediments to competition can be categorised under five main headings: (i) market concentration; (ii) vertical foreclosure; (iii) lack of intra Community market integration; (iv) lack of transparency on the markets; and (v) price forming issues. Particular emphasis was put on the elimination of barriers to the cross border supply of gas and electricity. The proposed remedies include the use of EU competition rules on restrictive business practices, abuse of dominant position and State aid. The Commission is also considering a revision of EU merger rules, which will enable it to intervene in case of a large concentration on the market of a single Member State (see previous article).
NEXT WEEK’S EVENTS
Monday 21 November – Friday 25 November 2005
COUNCIL MEETINGS
General Affairs and External Relations Council (21 - 22 November 2005)
Agriculture and Fisheries Council (22 - 24 November 2005)
Economic and Financial Affairs Council (budget) (24 November 2005)
COURT OF JUSTICE
Judgments
Agriculture
C-136/04 Deutsches Milch-Kontor
Approximation of laws
C-384/02 Grøngaard and Bang
Company law
C-331/04 ATI EAC and Others
Free movement of goods
C-366/04 Schwarz
Regional policy
Joined Cases C-138/03, C-324/03, C-431/03 Italy v Commission
Social policy
C-144/04 Mangold
Transport
C-506/03 Germany v Commission
Opinions
Approximation of laws
C-177/04 Commission v France
C-431/04 Massachusetts Institute of Technology
Environment and consumers
C-98/03 Commission v Germany
Free movement of goods
C-421/04 Matratzen Concord
Judgments Convention/Enforcement of judgments
C-3/05 Verdoliva
Transport
C-317/04 Parliament v Council
C-318/04 Parliament v Commission
COURT OF FIRST INSTANCE
Judgments
Intellectual property
T-396/04 Soffass v OHMI - Sodipan (NICKY)
T-346/04 Sadas v OHMI - LTJ Diffusion (ARTHUR ET FELICIE)
T-135/04 GfK v OHMI - BUS (Online Bus)
T-3/04 Simonds Farsons Cisk v OHMI - Spa Monopole (KINJI by SPA)
