Brussels Brief - April 6, 2007
April 6, 2007
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Due to the closure of the Commission and other European Institutions over the Easter period, the next issue of Brussels Brief will be sent on Friday 20 April.
KEY DEVELOPMENTS
Competition: Commission Confirms Sending Statement of Objections in Alleged Cartel in Bathroom Fittings and Fixtures Sector
Sara Bacchio
The European Commission has confirmed that it has sent a Statement of Objections to the members of an alleged cartel in the bathroom fittings and fixtures sector. Statements of Objections constitute a formal initiation of proceedings against companies accused of collusion and can lead to fines of up to ten per cent of a company’s world wide annual turnover. In November 2004, the Commission carried out “dawn raids” in search of evidence of the alleged cartel. The manufacturers of bathroom fittings were suspected of having exchanged business sensitive information and price fixing. The parties now have two months to submit their responses to the Commission's accusations.
Competition: Commission Initiates Proceedings Against Record Companies and Apple Over i-Tunes
Philip Torbøl
The European Commission has sent a Statement of Objections to major record companies and Apple for having agreed territorial restrictions by which consumers are unable to buy music from iTunes on-line stores other than those of their country of residence. The restriction means that UK citizens, for instance, are prevented from buying music from i-Tunes stores of other EU countries, where the price is typically lower. This is a breach of EU competition rules, according to the Commission. The parties now have two months to submit their responses to the Commission's accusations.
Internal Market: Commission Communication for Improvement of EU Patent System
Yannis Virvilis
The European Commission has published a Communication highlighting the need to improve the EU’s patent system, most notably by intstituting a European patent. At the moment, patents are protected at a national level, which makes patent protection in Europe considerably more expensive than in the US or Japan. The existing system of patent litigation in the EU also entails the risk of multiple patent litigation in several countries, leading to high costs for companies and lower levels of legal certainty. The Commission calls for the institution of a European patent – an idea recently abandoned due to disagreement regarding the applicable language regime – as well as improvement of the existing system of patent litigation.
Competition: E.ON Drops Endesa Bid Amid Protectionism Concerns
Elena Kostadinova
The German energy giant E.ON AG has agreed to withdraw its bid for Endesa, thus ending an 18-month battle that saw E.ON’s bid thwarted by repeated government intervention. If, as expected, Enel and Acciona take control of the Spanish utility Endesa, E.ON will still receive a portfolio of assets in Spain, Italy, France, Poland and Turkey. The portfolio, valued at EUR 10 billion, includes the Spanish power utility Viesgo from Enel. According to E.ON this acquisition will make it the fourth largest player on the Spanish market by 2010. E.ON's bid for Endesa was approved a year ago by the European Commission but stalled due to barriers arising out of Spanish legislation. Consequently, as already reported in Brussels Energy Brief of March 2007, the Commission referred Spain to the European Court of Justice on 28 March 2007 for violating EU merger rules.
Environment: EU and US Head for Clash on Climate Change
Benoît Keane
A joint EU – US strategy on climate change was thrown into doubt when diplomats failed to come to an agreement following meetings in Washington. Climate change was to form one of the central themes to the EU – US summit in Germany later this month. The EU wants to see transatlantic commitments to limit global warming to 2°C, to expand and deepen carbon markets and to invest in clean technology projects. The EU also wants to develop joint standards for carbon capture, biofuels, clean technologies, energy efficiency appliances, buildings and power plants. However, the US has focused on technological change as the primary means to reduce carbon emissions – measures which the EU sees as wishful thinking without the concrete requirements of emissions trading schemes.
Environment: Increase in CO2 Emissions in 2006
Bróna Heenan
According to preliminary data, the vast majority of heavy industrialised plants covered by the European Emissions Trading Scheme (ETS) recorded an overall increase in CO2 emissions in the order of 1-1.5 per cent in 2006. The credibility of the ETS relies on creating a scarcity in the market for pollution allowances leading to high carbon prices and greater incentives for companies to cut their emissions. Where there is an over-allocation of pollution allowances carbon prices fall, so the European Commission is assessing all national plans to ensure the necessary scarcity in the European carbon market. Fully verified data for 2006 is not expected until mid May 2007.
Trade: EU Offers Full Market Access to Africa, Caribbean and Pacific Regions
Elena Kostadinova
The European Union has proposed the unilateral removal of all remaining tariffs and import quotas for all but one of the African, Caribbean and Pacific (ACP) countries as part of the Economic Partnership Agreement negotiations. The only exception will be South Africa, where a number of products will continue to be subject to import duties. The EU offer covers all products, including agricultural goods such as beef, dairy, cereals, and all fruit and vegetables. The ACP countries will not be required to remove their tariffs and import quotas for products originating in the EU. It is expected that the new agreement will enter into force on 1 January 2008. Transitional periods are provided for rice and sugar only.
Taxation: Commission Tackles Discriminatory Taxation in Ireland
Geert Dierickx
The European Commission has requested Ireland to amend its legislation concerning taxation on a remittance basis. Persons resident in Ireland but not domiciled or ordinarily resident there are taxed on foreign source investment income only if such income is remitted to Ireland. However, by way of exception to this rule, UK source investment income is taxable in these circumstances, thus treating UK source investment income less favourably than income arising in other EU Member States. This makes it more difficult for UK investment providers to attract capital from persons who reside in Ireland without being domiciled or ordinarily resident there. According to the Commission, this restricts the free movement of capital in violation of the EC Treaty. If Ireland does not modify its tax rules in this respect, the Commission may refer the matter to the European Court of Justice.
Telecommunications: Report on European Electronic Communications Regulation and Markets 2006
Marta Becerra
On 2 April 2007, the European Commission issued its 12th report on telecom markets, where revenues are almost EUR 290 billion. The report examines market and consumer developments and the regulatory environment in the ICT sector, and includes individual chapters covering the situation in each Member State. The conclusion is that the implementation of the regulatory framework is working overall to bring competition to e-communications markets, with resulting benefits to consumers in terms of prices and innovative converged services. However, consistent regulation across the single market is not currently available. The Commission will address this issue with the reform of the EU telecom rules, planned for summer this year.
NEXT WEEK’S EVENTS
Monday 9 April – Friday 13 April 2007
COUNCIL MEETINGS
No meetings scheduled for next week
COURT OF JUSTICE
Judicial vacation of the Court of Justice from 2 – 15 April inclusive
COURT OF FIRST INSTANCE
Judicial vacation of the Court of First Instance from 2 – 15 April inclusive
