Brussels Brief - December 2, 2005
December 2, 2005
Full Printable Version in PDF Format
(Adobe Acrobat Reader required, available for free download here)
KEY DEVELOPMENTS
Internal Market: Cross-Border Mergers Directive Comes into Force
Patrice Corbiau
The cross-border mergers Directive that was adopted in a single reading by both the European Council and Parliament in October 2005 has now been officially published. This Directive facilitates cross-border mergers of limited-liability companies in the European Union, which until now was very difficult or entailed prohibitive costs. It establishes a simple framework drawing largely on national rules applicable to domestic mergers and avoids the winding-up of the acquired company. The Directive covers all limited-liability companies, with the exception of undertakings for collective investment in transferable securities. It also contains specific provisions for cooperative companies allowing Member States, with the Commission's agreement, to prevent such cooperatives from taking part in cross-border mergers for a maximum period of five years. Finally, the Directive contains specific provisions regarding the issue of cross-border mergers implying a loss or a reduction of employee participation. The Directive is expected to be of particular interest to small and medium-sized companies that want to operate in more than one EU Member State. It must be implemented by the Member States at a national level by 15 December 2007.
Competition: CFI Upholds Commission Decision in Zinc Phosphate Cartel
Yannis Virvilis
The Court of First Instance has dismissed the appeal against the 2001 Commission Decision in the Zinc Phosphate Cartel. In that Decision, the Commission had imposed fines totalling EUR 11.95 million on six European companies for anti-competitive behaviour. The Commission found that the companies had reached an agreement on market sharing, sales quotas, fixing of “base” or “recommended” prices and allocation of customers. The appellants did not deny their participation in the cartel, but sought the annulment or the reduction of the fines imposed by the Commission. The companies alleged that the Commission had misapplied Regulation 17 regarding the method for calculating fines and the infringement of several principles of EU law such as the principles of proportionality, equal treatment and non-discrimination. The Court dismissed the arguments of the parties, finding that the fines imposed by the Commission were calculated in an appropriate manner.
Competition: Commission Fines 16 Companies for Industrial Bags Cartel
Iveta Mikelsone
The European Commission has imposed fines totalling EUR 290 million on 16 companies for breach of EU Competition rules. These companies operated a cartel in the plastic industrial bags market. These bags are mainly used for the packaging of industrial products. Decisive evidence was provided to the Commission by British Polythene Industries in return for full immunity from fines under the Commission’s Leniency Notice. The cartel was active in Germany, France, Spain and the Benelux countries and ran for over 20 years. The companies involved agreed on prices, exchanged information on sales, shared large customer orders and organised collusive bidding at tenders. Those affected by the cartel may now seek damages before the courts of EU Member States.
Mergers: Acquisition of Exel by Deutsche Post Cleared
Alana Tervo
The European Commission has cleared the merger between Exel and Deutsche Post at the end of its Phase I investigation. Exel is a British logistics and freight forwarding company, and Deutsche Post is a German company active in express delivery, mail, financial services and logistics. Both Exel and Deutsche Post (through its subsidiaries DHL and Danzas) participate in the contract logistics and freight forwarding markets throughout Europe. The Commission’s enquiry concentrated on Finland, Hungary and Sweden, where the transaction would result in a significant increase in market share in air freight forwarding. However, the Commission found that not only would the merged entity face robust competition, but that customers had strong bargaining power and operated multiple sourcing policies. Furthermore, the air freight forwarding market was found to be European in scope, and thus the merged entity’s European market share was lower than the market shares for each of Finland, Hungary or Sweden. As a result the Commission concluded that the transaction would not impede effective competition in the European Economic Area (EEA) or any part of it.
Mergers: Behr Hella Services Joint Venture Cleared
Alana Tervo
The European Commission has cleared the joint venture between Behr Service GmbH (Behr) and Hella KHaA Hueck & Co (Hella). Behr’s parent company develops and produces components and systems for vehicle engine cooling, air conditioning and thermostatic control devices. Behr itself focuses on the supply of engine cooling and air conditioning components and well as the maintenance and repair of air conditioning systems. Hella develops, produces and supplies vehicle lighting systems and electronic components. As there appeared to be limited overlap in the relevant markets, this case was originally intended for treatment under the simplified merger procedure. However, a complaint led the Commission to launch a full market investigation. This investigation indicated that the German market would be most affected and that the joint venture company would likely emerge as the German market leader. However, the Commission found that the joint venture company would face competition from a number of operators, and that its customers would have strong countervailing buying power. As a result the Commission concluded that the transaction would not impede effective competition in the EEA or any part of it.
Trade: Reform of the EU Sugar Regime
Michal Cieplinski
After lengthy negotiations European Union agriculture ministers have agreed on a wide-ranging reform of the common market organisation for sugar. The reform fixes the economic and legal framework for the European sugar sector until 2014/2015. The new regime cuts the guaranteed price for white sugar by 36 per cent over four years. EU farmers will be compensated for, on average, 64.2 per cent of the price cut. Furthermore, EU countries can give up over half of their sugar production quota and, if they do so, are entitled to grant to their sugar farmers an additional payment of 30 per cent of the income loss for a period of five years. The new regime will also include an assistance scheme for the African, Caribbean and Pacific countries which traditionally export sugar to the EU, initially worth EUR 40 million for 2006.
State Aid: European Commission Prohibits German Tax Exemption Scheme
Anthony Seymour
A German State aid scheme which sought to exempt all housing companies in the labour market region of Berlin from the real estate transfer tax has been prohibited by the European Commission. Although the exemption was intended to encourage housing regeneration, it was criticised as it was not aimed specifically at the redevelopment of ‘pockets of deprivation’. The Commission does recognise that such areas exist in many cities and has approved schemes intended to improve conditions. In this instance, however, the Commission considered that as the scheme encompassed the whole of the labour market region of the city, it was disproportionate and would result in the distortion of competition in the EU.
NEXT WEEK’S EVENTS
Monday 5 December – Friday 9 December 2005
COUNCIL MEETINGS
Transport Council (5 December 2005)
Economic and Financial Affairs Council (6 December 2005)
Employment, Social Policy, Health & Consumer Affairs Council (8 - 9 December 2005)
Health Council (9 December 2005)
COURT OF JUSTICE
Judgments
Agriculture
C-453/03 ABNA and Others
C-461/03 Gaston Schul Douane-expediteur
Joined Cases C-11/04, C-12/04 Fratelli Martini and Cargill
C-194/04 Nederlandse Vereniging Diervoederindustrie Nevedi
Approximation of laws
C-66/04 United Kingdom v Parliament and Council
Common Customs Tariff
C-445/04 Possehl Erzkontor
Fisheries policy
C-38/05 Commission v Ireland
Industrial policy
C-33/04 Commission v Luxembourg
Law governing the institutions
C-220/03 BCE v Germany
Social policy
Joined Cases C-232/04, C-233/04 Güney-Görres
Taxation
Judgment C-63/04 Centralan Property
C-280/04 Jyske Finans
Opinions
Community own resources
C-105/02 Commission v Germany
Competition
C-105/04 P Nederlandse Federatieve Vereniging voor de Groothandel op Elektrotechnisch Gebied v Commission
C-113/04 P Technische Unie v Commission
Freedom of establishment
C-386/04 Centro di Musicologia Walter Stauffer
Judgments Convention/Enforcement of judgments
C-539/03 Roche Nederland and Others
Taxation
Joined Cases C-443/04, C-444/04 Solleveld
C-384/04 Federation of Technological Industries
Transport
C-456/04 Agip Petroli
COURT OF FIRST INSTANCE
Judgments
Competition
T-48/02 Brouwerij Haacht v Commission
Intellectual property
T-29/04 Castellblanch v OHMI - Champagne Roederer (CRISTAL CASTELLBLANCH)
