Brussels Brief - July 14, 2006
July 14, 2006
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KEY DEVELOPMENTS
Competition: Microsoft Fined EUR 280 Million
Yannis Virvilis
Pending judgment of the Court of First Instance in the Microsoft appeal, the European Commission has imposed on the US company a penalty payment of EUR 280 million for failure to comply with its obligations under the Commission’s 2004 decision. Microsoft could be subject to further fines, amounting to EUR 3 million per day, if it continues not to comply with the Commission’s decision. The Commission had ordered Microsoft to disclose complete and accurate interface documentation, which would allow non-Microsoft work group servers to achieve full interoperability with Windows PCs and servers. The Commission considers that Microsoft has not provided such documentation. The Commission’s finding was based on the advice of the Monitoring Trustee as well as TAEUS, its external technical advisors.
Internal Market: Commission Advances Plan to Slash Roaming Charges
Andrea Hamilton
The European Commission has announced a proposed regulation that would significantly reduce international roaming charges on mobile phone usage within the EU. Mobile phone operators earn approximately EUR 8.5 billion each year from roaming charges, which are fees assessed on mobile phone usage outside the user’s home country. The proposed regulation would control, but not eliminate, roaming fees by (i) fixing the wholesale rate that an operator can charge a foreign rival, and (ii) capping retail rates levied on consumers for making or receiving calls on their mobile phones while abroad in the EU. If the regulation is approved, mobile phone companies will have a six-month grace period before mandatory caps are implemented. Mobile phone companies have criticised the proposed regulation, arguing that it would stifle competition. See Brussels Brief of 31 May 2006.
Employment: ECJ Clarifies Rules for Protecting Disabled People on Dismissal
Lara Kuehl
In the recent case of Chacón Navas v Eurest, the European Court of Justice (ECJ) ruled on the concept of ‘disability’ for the purposes of the Directive on Equal Treatment in Employment and Occupation. The Directive provides a framework for combating discrimination in employment on the grounds of religion, belief, disability, age or sexual orientation. ‘Disability’ was interpreted as a different concept from ‘sickness’. In order for a limitation to fall within the concept of ‘disability,’ it must be probable that it will last for a long time. The ECJ concluded that dismissal solely on account of sickness does not fall within the framework of the Directive. The Court also decided that, in light of the employer's obligation to provide reasonable accommodation for people with disabilities, the Directive precludes dismissal on the grounds of disability if the dismissal is not justified by the fact that the person is not capable of performing the functions of the post.
Air Transport: Interoperability of European Air Traffic Management Systems
Maria Scimemi
As part of its Single European Sky initiative to reform the architecture of European air traffic control in order to meet future capacity and safety needs, the European Commission has adopted two Regulations concerning the interoperability of European air traffic management systems. The first is the ‘Co-ordination and Transfer’ Regulation which sets out the requirements for automatic systems that exchange flight data between air traffic control units. The second, the ‘Flight Plans’ Regulation, defines the procedural requirements for flight plans in the pre-flight phase and defines the obligations of a centralised flight planning, processing and distribution service. The interoperability measures aim at ensuring a high level of safety and efficiency of the systems located in the same or in different Member States and the distribution of the same flight plan to all parties in charge of submitting, modifying, accepting and distributing flight plans before take-off.
State Aid: Broadband Networks in Under-Served Regions of Greece
Elena Kostadinova
The European Commission has approved an initiative by the Greek authorities to grant public funding for the deployment of broadband networks in under-served regions of Greece. The EUR 210 million project is at present the most significant broadband project undertaken by a Member State. The project is aimed at bridging the digital divide between Athens and Thessaloniki and the rest of the country. It has two main axes: (i) the provision of broadband access services; and (ii) the funding of specific demand stimulation activities such as the purchase of PCs, modems, and any other internet related services (e.g. training). The Commission found that the initiative is compliant with EU State aid rules and consistent with Community priorities in this field, as set out in the i2010 initiative.
Mergers: Commission Clears Czech Gas Deal
Patrice Corbiau
The European Commission has approved the proposed acquisition of joint control of Pražská plynárenská a.s (PP) by E.ON Czech Holding AG (E.ON). PP is a Czech gas distribution and supply company. E.ON belongs to the German group E.ON AG. which is active in the supply of electricity and gas in various countries in Europe and in the United States. Following the transaction, PP will be jointly controlled by E.ON and the City of Prague. The Commission concluded that the horizontal overlaps between the gas supply activities of PP and E.ON would be limited, that the combined firm would continue to face strong, effective competition from the market leader RWE, and that the transaction would therefore not significantly impede effective competition.
Taxation: Commission Refers Portugal to ECJ over Tax Law
Michal Cieplinski
The European Commission has decided to challenge Portuguese tax provisions before the European Court of Justice (ECJ). Portugal levies a withholding tax of 20 per cent on the gross interest paid by Portuguese resident borrowers to non-resident lenders. On the other hand, interest paid to resident financial institutions is not subject to a withholding tax but to Portuguese corporate income tax. The result is that the interest payments to foreign banks may sometimes be taxed more heavily than the interest payments to Portuguese banks. The Commission considers that the higher taxation of foreign banks restricts the freedom to provide services and the free movement of capital. In December 2005 the Commission sent a reasoned opinion to Portugal requesting a change in the law, but did not receive a satisfactory response.
State Aid: Commission Endorses Support for Green Electricity in Austria
Geert Dierickx
The European Commission has authorised the Austrian ‘feed-in’ tariffs for electricity from renewable sources and the support tariff for combined heat and power installations for public district heating. This decision retroactively authorises the support measures contained in the Austrian Green Electricity Act 2002 and paves the way for the continuation of support under the new Green Electricity Act recently adopted by the Austrian Parliament. As all the requirements of the Community guidelines for State aid for environmental protection are satisfied, the Commission considers that the aid does not threaten to distort competition in the Single Market. The Commission’s decision is in line with a number of State aid decisions adopted in recent years concerning the Netherlands, the United Kingdom and Denmark, all allowing significant and long-term support for the production of green electricity.
Trade: New WTO Transparency Mechanism for Regional Trade Agreements
Elena Kostadinova
The World Trade Organisation (WTO) Negotiating Group on Rules has formally adopted a decision to approve a new WTO transparency mechanism for Regional Trade Agreements (RTAs). The new transparency mechanism provides for early announcement of any RTA and notification to the WTO. Some 197 RTAs already in force have been notified to the WTO and are being examined for consistency with WTO rules. Differences between Members on how to interpret the criteria for assessing the consistency of RTAs with WTO rules have however created a lengthening backlog of uncompleted reports in the Committee on RTAs. This situation should now be resolved by the proposed mechanism which is to be implemented on a provisional basis. Members will have to review, and if necessary modify or replace this decision with a permanent mechanism adopted as part of the Doha Round.
NEXT WEEK’S EVENTS
Monday 17 July – Friday 21 July 2006
COUNCIL MEETINGS
General Affairs and External Relations Council (GAERC) (17 – 18 July 2006)
Agriculture and Fisheries Council (18 July 2006)
COURT OF JUSTICE
Judgments
Approximation of laws
C-339/04 Nuova società di telecomunicazioni
Citizenship of the Union
C-406/04 De Cuyper
Competition
C-519/04 P Meca-Medina and Majcen v Commission
Intellectual property
C-214/05 P Rossi v Office for Harmonisation in the Internal Market
Law governing the institutions
C-119/04 Commission v Italy
Social security for migrant workers
C-50/05 Nikula
COURT OF FIRST INSTANCE
Judicial vacation of the Court of First Instance from 17 July – 3 September 2006 inclusive
