Brussels Brief - June 26, 2009
June 26, 2009
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Key Developments
Mergers/Energy: Commission Approves Proposed Acquisition of Essent by RWE Subject to Conditions
Lawrence Grabau
The European Commission has cleared under the EC Merger Regulation the proposed acquisition of Netherlands-based Essent, by Germany-based RWE. The Commission found that the transaction, as notified, would give rise to competition concerns on the German wholesale electricity and gas markets. In order to resolve these concerns and to avoid a Phase II investigation, RWE has agreed to divest Essent’s controlling shareholding in Stadtweke Bremen AG. The Commission was satisfied, following market investigation, that this commitment would ensure effective competition in the German wholesale electricity and gas markets.
The impact of energy reform, in particular in relation to Dutch legislation imposing the requirement of unbundling of energy generation activities from transmission activities, means it has become increasingly difficult for Essent to compete effectively on the European markets. Mergers of this kind are expected to become more frequent as energy companies seek to diversify their businesses in light of the ongoing liberalisation of the EU energy markets.
Internal Market/Cosmetics: ECJ Limits the Use of Comparative Advertising for Imitation Products
Mélanie Bruneau
The European Court of Justice (ECJ) has provided guidance to the High Court of England and Wales (the High Court) regarding the interpretation of the Trade Mark Directive and the Directive concerning misleading and comparative advertising.
L’Oréal brought an action before the High Court against Bellure, Malaika and Starion (collectively Bellure) alleging infringement of its trade mark rights. Bellure markets products that imitate L’Oréal’s and provides comparison lists to retailers that indicate the original fragrance brand of which its perfume is an imitation. The High Court has asked the ECJ to clarify the interpretation of the Directives.
The ECJ considered that: i) the advantage arising from the use by a third party of a similar mark is unfair when that party seeks to benefit from the power of attraction, the reputation and the prestige of that mark, without paying any financial compensation for the marketing effort; ii) the proprietor of a mark is entitled to prevent the use by a third party of an identical sign in comparative advertising provided that such use, even if it does not affect the essential function of the mark (i.e., to indicate the origin of the products), affects or could affect other functions of the mark, which include communication, investment or advertising functions; and iii) an advertiser is prohibited from stating in comparative advertising that the product marketed constitutes an imitation of the product covered by the mark. The advantage gained by the advertiser as a result of such unlawful comparative advertising must be considered to be taking unfair advantage of that mark’s reputation.
State Aid/Health: Commission Authorises Irish Health Insurance Tax and Levies Scheme
Matthew Kopetski
The European Commission has approved a new Irish health insurance scheme that includes both levies and tax-relief measures designed to decrease the risk differentials for health insurers between old and young customers.
The scheme gives insured individuals tax relief that increases with age and is paid directly to that person's insurer. This relief is financed by a flat rate levy on all insurers, payable after each insured life. The effect of these measures is that they reduce the cost of insuring older lives and increase the cost of insuring younger ones.
The Commission found that although the tax relief is directed at individuals, it has an effect on private health insurers, particularly those with higher risk profiles, and therefore constitutes State aid. However, the Commission decided that the scheme was compatible with Article 86(2) of the Treaty because i) private health insurance qualifies as a public service and ii) the Irish Government had introduced a mechanism to prevent the overcompensation of insurers.
State Aid: Commission Sets Criteria for In-Depth Assessment of Regional Aid to Large Investment Projects
Katarzyna Wilk
The European Commission has adopted a Guidance paper setting out criteria for the in-depth assessment of regional aid for large investments projects. Based on the State Aid Action Plan for 2005-2009, the guidance seeks to explain the economic approach taken by the Commission under formal investigation proceedings of such aid, as foreseen by the Regional Aid Guidelines 2007-2013. It is thus aimed at helping public authorities and companies understand how best to present these regional aid projects, with a view to taking decisions faster.
According to the Regional Aid Guidelines 2007-2013, large investment projects above certain thresholds must be notified individually to the Commission as they may carry a higher risk of distorting competition. The Commission will conduct an in-depth assessment when the aid beneficiary has a market share of more than 25 per cent or the production capacity created by the project exceeds 5 per cent of the market (while the growth rate of the product market concerned is below the European Economic Area GDP growth rate).
In conducting this assessment, the Commission uses a balancing test that weighs the positive effects brought about by the notified aid against the negative impact of any potential distortions of competition. Public authorities and companies concerned should therefore provide information on any positive effects of the aid, including its appropriateness, proportionality and incentive effect.
NEXT WEEK’S EVENTS
Monday 29 June – Friday 3 July 2009
COUNCIL MEETINGS
No Council meetings scheduled for next week
COURT OF JUSTICE
Judgments
Agriculture
C-343/07 Bavaria and Bavaria Italia
Area of Freedom, Security and Justice
C-111/08 SCT Industri
Commercial policy
C-302/08 Zino Davidoff
Common Customs Tarif
C-7/08 Har Vaessen Douane Service
Freedom of establishment
C-490/08 Commission v Belgium
Freedom of movement for persons
C-465/08 Commission v Greece
C-567/08 Commission v Luxembourg
Free movement of goods
C-32/08 FEIA
Taxation
C-377/08 EGN
Opinion
Approximation of laws
C-101/08 Audiolux and Others
Competition
Joined cases C-501/06 P, C-513/06 P, C-515/06 P, C-519/06 P GlaxoSmithKline Services v Commission, Commission v GlaxoSmithKline, EAEPC v GlaxoSmithKline, Aseprofar v GlaxoSmithKline
Environment and consumers
C-263/08 Djurgården-Lilla Värtans Miljöskyddsförening
Freedom to provide services
C-169/08 Regione autonoma della Sardegna
Transport
Joined cases C-402/07, C-432/07 Sturgeon and Others
COURT OF FIRST INSTANCE
Agriculture
T-259/05 Spain v Commission
Competition
T-24/07 ThyssenKrupp Stainless v Commission
Intellectual property
T-435/05 Danjaq v OHMI - Mission Productions (Dr. No)
T-419/07 Okalux v OHMI - Messe Düsseldorf (OKATECH)
T-16/08 Perfetti Van Melle v OHMI - Cloetta Fazer (CENTER SHOCK)
T-414/07 Euro-Information v OHMI (Représentation d’une main tenant une carte avec trois triangles)
T-311/08 Fitoussi v OHMI - Loriot (IBIZA REPUBLIC)
Social policy
T-444/07 CPEM v Commission
State aid
Joined cases T-81/07, T-82/07, T-83/07 KG Holding v Commission, Kliq v Commission, Kliq Reïntegratie v Commission
Joined cases T-273/06, T-297/06 ISD Polska and Industrial Union of Donbass v Commission, ISD Polska v Commission
T-288/06 Regionalny Fundusz Gospodarczy v Commission
T-291/06 Operator ARP v Commission
