Brussels Brief - September 16, 2005
September 16, 2005
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KEY DEVELOPMENTS
ECJ: EU Competence in relation to Criminal Sanctions
Javier Berasategi
The European Court of Justice (ECJ) has rendered an important ruling in the field of environmental protection and Community competence generally. The Court held that "as a general rule, neither criminal law nor the rules of criminal procedure fall within the Community’s competence.... However, the last-mentioned finding does not prevent the Community legislature, when the application of effective, proportionate and dissuasive criminal penalties by the competent national authorities is an essential measure for combating serious environmental offences, from taking measures which relate to the criminal law of the Member States which it considers necessary in order to ensure that the rules which it lays down on environmental protection are fully effective". The principle laid down by the ECJ rests on the fact that the protection of the environment constitutes "one of the essential objectives of the Community" (see Article 2 EC) The interesting aspect of this case is that it implies that a similar line of reasoning could be applied to other fields of EU law such as, for instance, competition law.
Internal Market: New Compromise Proposal for Chemicals Regulation (REACH)
Patrice Corbiau
The proposed Registration, Evaluation and Authorisation of Chemicals Regulation (REACH) would make manufacturers, importers and suppliers of substances responsible for ensuring that the substances they market do not adversely affect human health and the environment. EU Member States are currently moving towards a new proposal drafted by the UK Presidency that would radically simplify the initial regime proposed by the European Commission in 2003 and soften the impact of the new rules on industry. The initial proposal contained a plan that would have obliged businesses to register some 30,000 substances with a new European Chemicals Agency. But under a proposal from the UK Presidency, substances produced in low volumes would only face the full registration requirements if they were deemed to be particularly harmful or widely distributed. This would apply to some 17,500 substances and could save up to EUR 630 million. In addition the presidency text proposes a scheme known as "one substance, one registration", whereby companies would share the cost and effort of compiling the data for registration. The Presidency hopes to obtain political agreement on its compromise as early as late November.
Trade: New European Commission Banana Tariff Proposal
Philip Bentley QC
The European Commission has presented a revised proposal for a most favoured nation (MFN) tariff on bananas of EUR 187 per tonne, to enter into force on 1 January 2006. This proposal comes after the WTO arbitrator found that the previous offer of EUR 230 per tonne did not result in maintaining at least total market access for MFN banana suppliers, taking into account all EU market-access commitments relating to bananas. In coming to this conclusion, the WTO Arbitrator took into account the fact that the African, Caribbean and Pacific (ACP) countries are given a tariff-free quota of 775,000 tonnes. The Commission will now consult with the Latin American banana exporting countries with a view to obtaining their agreement on the new tariff before 1 January 2006. (See Brussels Brief of 8 April 2005).
State Aid: Greek Carrier to Repay Illegal Aid
Yannis Virvilis
The European Commission has found that a number of measures adopted by the Greek State giving an unfair advantage to Olympic Airways and Olympic Airlines constitute illegal State aid. It is the second time that the Greek carrier has been ordered to pay back illegal aid. In 2002, the Commission demanded the recovery by the Greek State of EUR 160 million. Olympic Airlines is a new company, set up at the end of 2003, which took over the flight operations and most of the assets of the old Olympic Airways (slots, traffic rights etc.), leaving almost all of the debt in the old company. The Commission in the instant decision found that (i) the non-payment by Olympic Airways of tax and social security liabilities and (ii) the way in which Olympic Airlines was established were incompatible with the EC Treaty. The exact amount that should be recovered by the Greek State will be defined at a later stage, but it is expected that it will exceed EUR 500 million. It has to be noted that a privatisation procedure of Olympic Airlines is currently pending. It remains to be seen whether the Commission’s decision will deter potential buyers, in which case it is very probable that the Greek Government will proceed to the liquidation of Olympic Airlines’ assets.
Competition: Commission Fines Textile and Thread Cartels
Iveta Mikelsone
The Commission has just fined certain industrial thread producers in Germany, Belgium, the Netherlands, France, Switzerland and the UK a total of more than EUR 43 million for participating in price-fixing cartels, the highest individual fine being just over EUR 13 million. Some of the companies who cooperated in the investigation saw their fines reduced pursuant to the Commission’s Leniency Notice. A striking aspect of the investigation is the fact that the Commission’s original investigation was directed at cartels in three different markets: (i) the thread market for industrial customers in Benelux and the Nordic countries; (ii) the thread market for automotive customers in the European Economic Area; and (iii) the thread market for industrial customers in the UK. However, the evidence in relation to the latter sector was insufficient and so no fines were imposed in respect of this market.
Air Transport: Challenges to EU Air Passenger Regulation Dismissed by the Advocate General
Greg Sumner
Following claims that the February 2004 Regulation ensuring improved air passenger protection is contrary to the Montreal Convention, Advocate General Geelhoed has suggested that the Regulation be considered valid. His opinion is given in a case referred by the High Court of Justice of England & Wales to the European Court of Justice (ECJ) regarding the validity of the Regulation. The validity was challenged by the International Air Transport Association (IATA) and the European Low Fares Airline Association (ELFAA). The Advocate General considers that the new measures are a “suitable and proportionate” means of reducing the inconvenience to passengers caused by delays or cancellations. This opinion, while not binding on the judges, is seen as a major setback by the airline companies contesting the recent changes. The ECJ’s final ruling is expected by the end of the year.
State Aid: Commission Formally Investigates French Restructuring Aid to Ernault
Philip Torbøl
The European Commission has decided to open an in-depth investigation under Article 88(2)EC into a EUR 2 million restructuring aid for Ernault, the French machine tools manufacturer. At the beginning of this year the Commission cleared a grant of rescue aid of the same size and to the same company. This time, the Commission will examine whether the restructuring plan is able to restore the commercial viability of the company and whether competition would not be unduly distorted. Interested parties now have one month to submit their comments.
Energy: Priorities of the Energy Policy
Elena Kostadinova
The European Commissioner for Energy, Andris Piebalgs, has outlined five priorities for EU energy policy in addition to the liberalisation of the electricity and gas markets. First, he reiterates the objective of achieving a 20 per cent savings in energy consumption by 2020, in particular through the implementation of the Directive on energy performance of buildings and adoption of the Directive on energy efficiency and energy services. Second, Mr. Piebalgs will concentrate on promotion of alternative energy sources, such as biomass, bio-fuels and clean coal. The third objective will be to increase transparency in oil markets through statistical reports on EU oil stocks and the creation of an energy market monitoring system. The fourth objective is to negotiate increased oil supplies in the short term from OPEC countries, Russia and Norway. Finally, the Energy Commissioner plans to improve the mechanisms for reacting to emergency situations, such as experienced recently. All this points to the fact that industry should expect new legislation, impacting on the way they source and consume energy.
NEXT WEEK’S EVENTS
Monday 19 September – Friday 23 September 2005
COUNCIL MEETINGS
Agriculture and Fisheries Council (19 - 20 September 2005)
COURT OF JUSTICE
Judgments
Environment and consumers
C-221/03 Commission v Belgium
Opinions
Environment and consumers
C-302/04 Ynos Kft.
Social policy
C-53/04 Marrosu and Sardino
C-180/04 Vassallo
Taxation
C-280/04 Jyske Finans
COURT OF FIRST INSTANCE
Judgments
Common foreign and security policy
T-306/01 Yusuf and Al Barakaat International Foundation v Council and Commission
T-315/01 Kadi v Council and Commission
Competition
T-87/05 EDP v Commission
Intellectual property
T-130/03 Alcon v OHMI - Biofarma (TRAVATAN)
